Question: Samuelson Electronics is considering two mutually exclusive projects with non-conventional cash flows. The first project, Project Beta, has an IRR of 14 percent and the

Samuelson Electronics is considering two mutually exclusive projects with non-conventional cash flows. The first project, Project Beta, has an IRR of 14 percent and the second project, Project Alpha, has an IRR of 17 percent. Based on your calculations, the crossover rate for these projects is 13 percent. Given this information, which one of the following statements is correct?

  • Both projects should be accepted as both of the project's IRRs exceed the crossover rate.

  • Neither project should be accepted since both of the project's IRRs exceed the crossover rate.

  • You cannot determine which project should be accepted given the information provided.

  • Project Alpha should be accepted as its IRR is closer to the crossover point than is Project Beta's IRR.

  • Project Beta should be accepted as it has the higher IRR.

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