You are using a net present value profile to compare Projects A and B, which are mutually exclusive.Which one of the following statements correctly applies to the crossover point between these two?
A)The internal rate of return for Project A equals that of Project B, but generally does not equal zero.
B)The internal rate of return of each project is equal to zero.
C)The net present value of each project is equal to zero.
D)The net present value of Project A equals that of Project B, but generally does not equal zero.
E)The net present value of each project is equal to the respective project's initial cost.

Question

Quizplus · Accepted Answer

The crossover point is where the net present values (NPVs) of both projects are equal, but this value is generally not zero.

You Are Using a Net Present Value Profile to Compare