Use the information to answer the following questions. A company is analyzing two mutually exclusive projects, S and L, whose cash flows are shown below:

	Year 0	Year 1	Year 2	Year 3	Year 4
Cashflow for S	-200	100	140	50	10
Cashflow for L	-200	10	10	90	260

Assume the company can get an unlimited amount of capital at that cost.

WACC	NPV (S)	NPV (L)
5%
10%
15%
20%
25%

If the companys cost of capital is 10%, what is the net present value of each Project? Whats the profit foregone if the IRR method is used?

Select one:

a. NPVS = $33.35, NPVL = $63.24, $29.89

b. NPVS = $63.24, NPVL = $33.35, $-29.89

c. NPVS = $51.01, NPVL = $62.56, $11.55

d. NPVS = $82.26, NPVL = $75.63, $3.97

e. NPVS = $100.81, NPVL = $112.45, $11.25

Continued from previous question. If the companys cost of capital is 15%, what is the net present value of each Project? Based on NPV, which project will you choose?

Select one:

a. NPVS = $18.34, NPVL = $24.95, S

b. NPVS = $100.81, NPVL = $112.45, L

c. NPVS = $31.41, NPVL = $12.65, L

d. NPVS = $31.41, NPVL = $24.09, S

e. NPVS = $82.26, NPVL = $75.63, L

Continued from previous question. Which of the following statements is correct?

Select one:

a. If the WACC is larger than the crossover rate, a conflict arises between the NPV and the IRR methods.

b. The crossover rate should be between 15% and 20%.

c. The crossover rate should be smaller than 10%.

d. If the WACC is larger than the crossover rate, you will choose project L using the NPV method.

e. The crossover rate should be between 10% and 15%.