When graphing NPV at different discount rates for mutually exclusive projects,the project with the lower IRR should be selected whenever:
A) the rate corresponding to the crossover NPV exceeds the opportunity cost of capital.
B) the rate corresponding to the crossover NPV is less than the opportunity cost of capital.
C) that IRR exceeds the opportunity cost of capital.
D)the NPV is negative when discounted at the IRR.

Question

Quizplus · Accepted Answer

The project with the lower IRR should be selected when the crossover rate (where NPVs of both projects are equal) is higher than the opportunity cost of capital, indicating that the project with the lower IRR has a higher NPV at the opportunity cost of capital.

When Graphing NPV at Different Discount Rates for Mutually Exclusive