Question: Martin Manufacturing is considering two normal, equally risky, mutually exclusive, but not repeatable projects. Martin's cost of capital is 10%. The two projects have the

Martin Manufacturing is considering two normal, equally risky, mutually exclusive, but not repeatable projects. Martin's cost of capital is 10%. The two projects have the same investment costs, but Project A has an IRR of 15%, while Project B has an IRR of 20%. Assuming the projects' NPV profiles cross in the upper right quadrant, which of the following statements is CORRECT?

a. If the crossover rate is 8%, Project B will have the higher NPV.

b. Only one project has a positive NPV.

c. If the crossover rate is 8%, Project A will have the higher NPV.

d. Since the projects are mutually exclusive, the firm should always select Project B.

e. Each project must have a negative NPV.

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