Continued from previous question

Subject:FinancePrice: Bought3

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Continued from previous question. 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. $12.45 

b. $20.80

c. $ 4.01

d. $29.89

e. $ 1.79

 

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

Select one:

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

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

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

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

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