Which project will you choose? Use the information to answer the following questions. A company is analyzing two mutually exclusive projects, S and L, whose cash flows are shown below:

If the companys cost of capital is 5% and the decision is made by choosing the project with the higher IRR, how much value will be forgone? (Hint: Complete the NPV profile)

a. $ 4.01

b. $29.89

c. $ 1.79

d. $20.80

e. $12.45

Continued from previous question. Which of the following statements is correct?

a. The crossover rate should be between 15% and 20%.

b. If the WACC is larger than the crossover rate, a conflict arises between the NPV and the IRR methods.

c. If the WACC is smaller than the crossover rate, you will choose project S using the NPV method.

d. The crossover rate should be between 10% and 15%.

e. The crossover rate should be smaller than 10%.

Which project will you choose? Use the information to answer the following questions. A company is analyzing two mutually exclusive projects, S and L, whose cash flows are shown below: Year o Year 1 Year 2 Year 3 Year 4 Cashflow for S -100 40 50 30 30 Cashflow for L -100 10 10 50 90 Assume the company can get an unlimited amount of capital at that cost. WACC NPV (S) NPV (L) 5% 10% 15% 20% 25% If the company's cost of capital is 5% and the decision is made by choosing the project with the higher IRR, how much value will be forgone? (Hint: Complete the NPV profile) Select one: a. $ 4.01 b. $29.89 c. $ 1.79 d. $20.80 e. $12.45 Continued from previous question. Which of the following statements is correct? Select one: a. The crossover rate should be between 15% and 20%. b. If the WACC is larger than the crossover rate, a conflict arises between the NPV and the IRR methods. c. If the WACC is smaller than the crossover rate, you will choose project S using the NPV method. d. The crossover rate should be between 10% and 15%. e. The crossover rate should be smaller than 10%