Consider two projects, X and Y. Project X's IRR is 19% and Project Y's IRR is 17%. The projects have the same risk and the same lives, and each has constant cash flows during each year of their lives. If the cost of capital is 10%, Project Y has a higher NPV than X. Given this information, which of the following statements is CORRECT?
A) the crossover rate must be greater than 10%.
B) if the cost of capital is 8%, project x will have the higher npv.
C) if the cost of capital is 18%, project y will have the higher npv.
D) project x is larger in the sense that it has the higher initial cost.
E) the crossover rate must be less than 10%.
Correct Answer:
Verified
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