Question
Werqo Corp is considering two mutually exclusive projects, Projects A and B, and has determined that the crossover rate for these projects is 13.7 percent
Werqo Corp is considering two mutually exclusive projects, Projects A and B, and has determined that the crossover rate for these projects is 13.7 percent and the required return for both projects is 4.2 percent. You have determined that you should accept project A if the required return is 14.6 percent. Given this you know that:
accept Project B if the required return is less than 14.6 percent. | ||
Project B will have a higher NPV than Project A if the discount rate is less than the crossover rate. | ||
both projects have a zero NPV at a discount rate of 13.7 percent. | ||
you are indifferent to the projects at any discount rate below 14.6 percent. | ||
you are indifferent to the projects at any discount rate below 13.7 percent. |
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