When will you be indifferent between two mutually exclusive projects of similar size?
A) When the required return on the projects is equal to the crossover discount rate
B) When the time period of the projects are equal
C) When both projects have only cash inflows following the initial cash outflow
D)When both projects have IRR's that exceed the crossover discount rate

Question

Quizplus · Accepted Answer

The crossover discount rate is the point where the NPV of the two projects is equal. At this point, the investor is indifferent between the two projects, as they will generate the same amount of value for the investor. Therefore, Option A is the correct answer.

When Will You Be Indifferent Between Two Mutually Exclusive Projects