The blue curve $($labeled $"$L$")$ depicts the NPV for a project with larger cash flows later of $-$ $$1,000,$$$100,$$$300,$$$400,$ and $$975.$ The red curve $($labeled $"$S$")$ depicts the NPV for a project with larger cash flows sooner of $-$$$1,000,$$$500,$$$400,$$$300,$ and $$100.$ Drag on the graph either laft or right to change the cost of capital interest rate at which the $NPV$ is evaluated for the tho projects.

Project $:$NPV=C{F}_0+{\displaystyle \underset{t=1}{\overset{N}{}}}\frac{C{F}_1}{(1+r{)}^{}}=-$$$1,000+\frac{\text{\$}500}{(1+0\mathrm{.}1000{)}^{-}}+\frac{\text{\$}400}{(1+0\mathrm{.}1000{)}^2}+\frac{\text{\$}300}{(1+0\mathrm{.}1000{)}^1}+\frac{\text{\$}100}{(1+0\mathrm{.}1000{)}^4}=$$$78\mathrm{.}82$

Project L: $NPV=C{F}_0+{\displaystyle \underset{t=1}{\overset{N}{}}}\frac{C{F}_r}{(1+r{)}^2}=-$$$1,000+\frac{\text{\$}100}{(1+0\mathrm{.}1000{)}^t}+\frac{\text{\$}300}{(1+0\mathrm{.}1000{)}^2}+\frac{\text{\$}400}{(1+0\mathrm{.}1000{)}^2}+\frac{\text{\$}675}{(1+0\mathrm{.}1000{)}^2}=$$$100\mathrm{.}40$

Cost of Capital

What is the approximate cost of capital for which the two cash flows are about equal?

a$.10\%$

b$.12\%$

c$.13\mathrm{.}5\%$

d$.14\mathrm{.}5\%$

$-$Select$-B$

What is the approximate internal rate of return $($IRR$)$ for the Project $L$ cash flow?

a$.10\%$

b$.12\%$

c$.13\mathrm{.}5\%$

d$.14\mathrm{.}5\%$

$-$Select$-0$

What is the approximate internal rate of return $($IRR$)$ for the Project $S$ cash flow?

a$.10\%$

b$.12\%$

c$.13\mathrm{.}5\%$

d$.14\mathrm{.}5\%$

$-$select$-0$

What is the name for the point at which the two projects' NPVs are equal?

a$.$ Inflection point

b$.$ Equal NPV rate

c$.$ Crossover rate

d here is no special name for this point

At a cost of capital less than the point at which they cross, which project will have the higher NPV$?$

a$.$ Project $S$

Project L

c$.$ Project $S$ and $L$ will have the same NPV

d$.$ Cannot determine

At a cost of capital greater than the point at which they cross, which project will have the higher NPV$?$

a$.$ Project $S$

b$.$ Project L

c$.$ Project $S$ and $L$ will have the same NPV

d$.$ Cannot determine

$-$Seinct$-B$

The internal rate of return $($IRR$)$ is the point at which a project's NPV equals $0.$ If the cost of capital were $5\%($move the silder so that is the case$),$ then

Project $S$ is the better project because it has the higher IRR.

b$.$ Project $L$ is the better project because it has the higher NPV$.$

c$.$ It depends because there is a conflict between IRR and NPV$.$