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

Question

Quizplus · Accepted Answer

If project A has a required return of 6 percent and the crossover point (where the NPV of both projects is equal) is 9 percent, then project A will always have a higher NPV than project B when the discount rate is below 9 percent. Therefore, project A should always be accepted when the discount rate is less than 9 percent.

You Are Comparing Two Mutually Exclusive Projects