Question: Project A and Project B are mutually exclusive. Project A has an IRR of 10 percent. Project B has an IRR of 12 percent. The

Project A and Project B are mutually exclusive. Project A has an IRR of 10 percent. Project B has an IRR of 12 percent. The crossover rate is 7%. Both projects have standard cashflow, (i.e. investment at time zero followed by a series of cash inflows). If the firms marginal cost of capital is 6 percent, then:

		Project B should be accepted and Project A rejected.
		Project A should be accepted and Project B rejected.
		Both projects should be rejected.
		Both projects should be accepted.

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