For this and the next 2: Consider the two projects' cash flows shown below. Calculate payback period for Project L. Year Project L Projects 0 -$150 1 2 3 -15 90 220 - 150 105 100 -30 1) 2 years 2) 3.54 years 3) 2.34 years 4) None of the above The NPV and IRR produce conflicting capital budgeting decisions: 1) If cost of capital is equal to the crossover rate 2) If cost of capital is less than the crossover rate 3) If cost of capital is above the crossover rate 4) Conflicting rates could result regardless of where the discount rate lies Given the nature of cash flows for Project L, is it possible for multiple IRR to exist? 1) Yes, cash flows have more than negative sign 2) Yes, cash flows switch signs more than once 3) No, there is only one change in cash flow sign 14) No, the initial cash flow is negative and the final cash flow is positive 5) May be Calculate the crossover rate for the two projects. What is the significance of this rate? 1) Crossover rate = 40.23%. It is the discount rate at which two competing projects have the same NPV. 2) Crossover rate - 40.23%. Below this rate, NPV and IRR produce conflicting capital budgeting decisions. 3) Crossover rate = 40.23%. Above this rate, there is no conflict in project = selection by NPV and IRR. 4) All of the above is correct 5) None of the above