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Nick has just finished plotting the relationship between the NPV of two independent projects (MiniHospital and SuperHospital) for different discount rates. He finds that the
Nick has just finished plotting the relationship between the NPV of two independent projects (MiniHospital and SuperHospital) for different discount rates. He finds that the IRR of MiniHospital is 8.5% while that of SuperHospital is 6.2%. The crossover rate for the two projects is 5%. Knowing that the two projects are independent, Nick should: Select one: O a. If the opportunity cost of capital is greater than 5%, choose the MiniHoslujtal project. If the discount rate is less than 5%, choose the SuperHospital Project b. Choose the MiniHospital project as its IRR is less than the SuperHospital project O c. Choose the SuperHospital project as its IRR is greater than the MiniHospital project O d. Cannot make a recommendation because IRR should not be used for ranking projects. Nic should calculate the NPV to make his decision. He should pick the project with the higher NPU Oe. If the opportunity cost of capital is less than 6.2%, then accept both projects. If the opportur cost of capital is greater than 6.2% but less than 8.5%, then accept only the Mini Hospital proje
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