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 reject project B if the required return is 6 %.

Question

Quizplus · Accepted Answer

Since the crossover point is 9%, at any required return below 9%, Project A has a higher NPV than Project B. Therefore, if the decision is to accept Project A at a 6% required return, it implies Project B is less desirable at that rate and should be rejected.

You Are Comparing Two Mutually Exclusive Projects