Question: You are considering the following two mutually exclusive projects. The required return on each project is 14 percent. Which project should you choose to invest

You are considering the following two mutually exclusive projects. The required return on each project is 14 percent. Which project should you choose to invest in based on NPV? Which one should you choose based on IRR?

year project a project b 0 -21000 -21000 1 7000 15000 2 7000 5000 3 15000 7000

Project A, Project B Project B, Project B Project A, Project A Project B, Project A

You are considering the following two mutually exclusive projects. What is the crossover rate where the NPVs of the two projects are equal?

year project a project b 0 -21000 -21000 1 7000 15000 2 7000 5000 3 15000 7000

13.28% 10.35% 6.89% 8.47%

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