Question
Project Brady and Project Grey are two mutually exclusive projects with equal risk that are competing to use the same finite resource of limited-edition hotstoppers,
Project Brady and Project Grey are two mutually exclusive projects with equal risk that are competing to use the same finite resource of limited-edition hotstoppers, which are reusable plastic sticks designed to stop hot coffee spilling from your takeaway coffee cup. Both projects commence with an initial up-front cash inflow followed in future years by a series of annual cash outflows. Both projects have positive internal rates of return (IRR) and both projects share the same positive net present value (NPV) when the discount rate is exactly 19% per annum. Project Brady has a lower IRR than Project Grey.
Which of the following statements is correct?
(No answer given)
At any positive discount rate below 19% p.a., Grey should be accepted and Brady should be rejected.
At any positive discount rate above 19% p.a., Brady should be accepted and Grey should be rejected.
At any positive discount rate below 19% p.a., Brady should be accepted and Grey should be rejected.
At any positive discount rate above 19% p.a., Grey should be accepted and Brady should be rejected.
More than one of the above answers are correct.
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