Question: Consider the following net present value profile. Net Present Value 400 300 200 100 0 -100 1 Project L's Net Present Value Profile 5

Consider the following net present value profile. Net Present Value 400 300 200 100 0 -100 1 Project L's Net

Consider the following net present value profile. Net Present Value 400 300 200 100 0 -100 1 Project L's Net Present Value Profile 5 7.2 Crossover Rate - 7.2% 10 IRR = 11.8% Project S's Net Present Value Profile IRR = 14.5% Accept Project L, but reject Project S. Reject both projects. Accept both projects. Accept Project S, but reject Project L. 15 Suppose both projects have same r which is 10%. Project S's NPV is 80 and Project L's NPV is 50. These (Project S & L) are independent projects. Which of the following decision is right? r (%)

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