# NPV: Which of the statements are correct?

Moynihan Motors has a WACC of 10%. The firm is considering two normal, equally risky, but mutually exclusive projects. Project A has an IRR of 15%, while Project B has an IRR of 20%. Which of the following statements is CORRECT?

A. Both projects 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 a higher NPV than Project A.

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

https://brainmass.com/business/net-present-value/npv-which-of-the-statements-are-correct-122289

#### Solution Preview

Answer: C. If the crossover rate is 8%, Project B will have a higher NPV than Project A.

Statement A: is incorrect as both project A and B have IRR greater than WACC.

Statement B: ...

#### Solution Summary

This solution determines which of the statements regarding NPV of two normal, equally risky, but mutually exclusive projects are correct.