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Instructions: Answer the following questions for these two mutually exclusive projects. The NPV profile displays the relative NPV of the two choices over different discount rates, the IRR for each project, and the crossover point.

In the "Settings" area select different scenarios and note how the graphs change. Use his information and the financial calculator to help you answer the questions below.

The questions are based on the data from the interactive.

Answer the following questions for these two mutually exclusive projects. The NPV profile displays the relative NPV of the two choices over different discount rates, the IRR for each project, and the crossover point. For these questions, use the default settings; do not select a scenario.

For low discount rates, which choice creates more value for the firm?

Multiple Choice

Purchase

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