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NPV

2. Projects A and B have identical expected lives and identical initial cash outflows (costs). However, most of one project’s cash flows come in the early years, whilemost of the other project’s cash flows occur in the later years. The two NPV profiles are given below:

Which of the following statements is CORRECT?
a. More of Project A’s cash flows occur in the later years.
b. More of Project B’s cash flows occur in the later years.
c. We must have information on the cost of capital in order to determine which project has the larger early cash flows.
d. The NPV profile graph is inconsistent with the statement made in the problem.
e. The crossover rate, i.e., the rate at which Projects A and B have the same NPV, is greater than either project’s
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Answer #1
e. The crossover rate, i.e., the rate at which Projects A and B have the same NPV, is greater than either project’s
answered by: cutie
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Answer #2

2. Projects A and B have identical expected lives and identical initial cash outflows (costs). However, most of one project’s cash flows come in theearly years, while most of the other project’s cash flows occur in the later years. The two NPV profiles are given below:

Which of the following statements is CORRECT?
a. More of Project A’s cash flows occur in the later years.-correctanswer
b. More of Project B’s cash flows occur in the later years.
c. We must have information on the cost of capital in order to determine which project has the larger early cash flows.
d. The NPV profile graph is inconsistent with the statement made in the problem.
e. The crossover rate, i.e., the rate at which Projects A and B have the same NPV, is greater than either project’s

answered by: Sumaita
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Answer #3
Hello. Recently there has been a change in Cramster Rules (I hope you have read the new Terms and Conditions). Cramster now bans users for giving answersdirectly. We have to send the answers to your inbox after you rate us. That is because people are copying from older threads which have public answers.Hence we can only send the answer after you rate.

So please me rate a Lifesaver and I'll send the solution to your inbox or email. You've got no other option to get the answer, because no one can give youthe answer over here. Even you might be banned for rating a user that gave the answer directly on your question. You need not worry as I have the solutionready in my notebook. Hope you rate me :)
answered by: skot
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Answer #4
We must have information on the cost of capital in order to determine which project has the larger early cash flows.
answered by: tory
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Answer #5

C. We must have information on the cost of capital in order to determine which project has the larger early cashflows.

answered by: Psalm91
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