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NPV, IRR

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McCall Manufacturing has a WACC of 10%. The firm is considering two normal, equally risky, mutually exclusive, but not repeatable projects. The two projects have the same investment costs, but Project A has an IRR of 15%, while Project B has an IRR of 20%. Which of the following statements is CORRECT?

a. Each project must have a negative NPV.
b. Since the projects are mutually exclusive, the firm should always select Project B
c. If the crossover rate is 8%, Project B will have the higher NPV
d. Only one project has a positive NPV
e. If the crossover rate is 8%, Project A will have a higher NPV than Project B

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Answers a multiple choice question on capital budgeting.

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McCall Manufacturing has a WACC of 10%. The firm is considering two normal, equally risky, mutually exclusive, but not repeatable projects. The two projects have the same investment costs, but Project A has an IRR of 15%, while Project B has an IRR of 20%. Which of the following statements is CORRECT?

a. Each project ...

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