Martin Manufacturing is considering two normal, equally risky, mutually exclusive, but not repeatable projects. Martin's
Posted: Wed Jul 06, 2022 6:44 pm
Martin Manufacturing is considering two normal, equally risky,mutually exclusive, but not repeatable projects. Martin's cost ofcapital is 10%. The two projects have the same investment costs,but Project A has an IRR of 15%, while Project B has an IRR of 20%.Assuming the projects' NPV profiles cross in the upper rightquadrant, which of the following statements is CORRECT a. Since the projects are mutually exclusive, the firm shouldalways select Project B.b. Only one project has a positive NPV.c. If the crossover rate is 8%, Project A will have the higherNPV.d. Each project must have a negative NPV.e. If the crossover rate is 8%, Project B will have the higherNPV.