37

Question 37 (2.5 points) Consider two projects, A and B, where Project A has an IRR of 18% and Project B has an IRR of 11%. Both projects have normal cash flows (i.e., a cash outflow in year O followed by cash inflows for all other years of the project) and the appropriate cost of capital for both projects is 14%. Which of the following statements is correct? ( 1) The NPV of Project B is greater than the NPV of Project A. ( 2) Both projects have a negative NPV. ( 3) There is not enough information provided to correctly answer this question. ( 4) Both projects have a positive NPV. ( 5) The NPV of Project A is greater than the NPV of Project B. Previous Page Next Page Page 37 of 41