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Projects A and B have identical expected lives and identical initial cash outflows (costs). However, most of one project's cash flows come in the early
Projects A and B have identical expected lives and identical initial cash outflows (costs). However, most of one project's cash flows come in the early years, while most of the other project's cash flows occur in the later years. The two NPV profiles are given below: Which of the following statements is CORRECT? a. The crossover rate, i.e., the rate at which Projects A and B have the same NPV, is greater than either project's IRR. b. The NPV profile graph is inconsistent with the statement made in the problem. c. We must have information on the cost of capital in order to determine which project has the larger early cash flows. d. More of Project A's
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