Determine constant cash flows during each year

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Question 1: Consider two projects, X and Y. 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 cost of capital is 10%, Project Y has a higher NPV than X. Given this information, which of the following statements is CORRECT?

Option a. Project X is larger in the sense that it has the higher initial cost.

Option b. The crossover rate must be less than 10%.

Option c. If the cost of capital is 18%, Project Y will have the higher NPV.

Option d. The crossover rate must be greater than 10%.

Option e. If the cost of capital is 8%, Project X will have the higher NPV

Reference no: EM132484934

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