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L5. An NPV profile plots a projects NPV at various costs of capital, labeled A and B in the graph. A projects NPV profile is

L5.

An NPV profile plots a projects NPV at various costs of capital, labeled "A" and "B" in the graph. A projects NPV profile is shown as follows. Identify the range of costs (ranges labeled "A" and "B") of capital that a firm would use to accept and reject this project.

image text in transcribed

A Accept or Reject
B Accept or Reject

True or False: The NPV and IRR methods can lead to conflicting decisions for mutually exclusive projects.

1. True

2. False

NPV (Dollars) 400 300 200 A 100 0 B -100 -200 0 2 4 6 8 10 12 14 16 18 20 COST OF CAPITAL (Percent)

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