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 and always reject project
B.

Question

Quizplus · Accepted Answer

The crossover point indicates the discount rate at which the net present values (NPVs) of two projects are equal. If the required return is below the crossover point (6% in this case, which is less than 9%), it means Project A has a higher NPV and is preferred. However, if the required return were above 9%, Project B would have a higher NPV, making it the preferred choice. Therefore, the statement that you should always accept Project A and always reject Project B is incorrect.

You Are Comparing Two Mutually Exclusive Projects