# Question

The following chart plots the net present value (NPV) of projects A and B at different discount rates. The projects have similar risk and are mutually exclusive.

a. What is the significance of the point on the graph where the two lines intersect?

b. What is the significance of the points on the graph where the two lines cross the zero NPV axis?

c. What is the likely explanation for the differences in net present value at the various discount rates?

d. Which project would you recommend? Why?

a. What is the significance of the point on the graph where the two lines intersect?

b. What is the significance of the points on the graph where the two lines cross the zero NPV axis?

c. What is the likely explanation for the differences in net present value at the various discount rates?

d. Which project would you recommend? Why?

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