Project X's IRR is 19% and Project Y's IRR is 17%.The projects have the same risk and the same lives,and each has constant cash flows during each year of their lives.If the WACC is 10%,Project Y has a higher NPV than X.Given this information,which of the following statements is CORRECT?
A) The crossover rate must be less than 10%.
B) The crossover rate must be greater than 10%.
C) If the WACC is 8%,Project X will have the higher NPV.
D) If the WACC is 18%,Project Y will have the higher NPV.
E) Project X is larger in the sense that it has the higher initial cost.

Question

Quizplus · Accepted Answer

Again,it is useful to draw NPV profiles that fit the description given in the question.Any number that meets the criteria will do.
? 11ea856c_8b9b_ff37_9aec_c5a59f1db208_TB1222_00 ?
As we can see from the graph,statement b is true,but the other statements are false.

Project X's IRR Is 19% and Project Y's IRR Is