You are comparing two mutually exclusive projects. The crossover point is 9 %. You determine that you should accept project A if the required return is 6%%. This implies that you should always accept project A anytime the discount rate is less than 9%%.

Question

Quizplus · Accepted Answer

The crossover point is where the NPVs of two projects are equal. If Project A is preferred at a 6% discount rate, which is below the crossover point of 9%, it implies that Project A has a higher NPV than Project B at any discount rate below 9%.

You Are Comparing Two Mutually Exclusive Projects