Question: Consider two mutually exclusive projects. The crossover rate for the two projects is 12%, at which point both have an NPV of $5,000. At a

Consider two mutually exclusive projects. The crossover rate for the two projects is 12%, at which point both have an NPV of $5,000. At a discount rate of 10%, Project 1 has a higher NPV than Project 2.

A. If the appropriate discount rate is actually 15% (not 10%), which project is better? Explain your answer.

B. Draw a rough sketch of NPVs and the crossover point to illustrate your answer. Use the following additional information as needed: Project 1s IRR is 15%. Project 2s IRR is 22%. Label the information provided on your graph.

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