Practical Management Science
Practical Management Science
6th Edition
ISBN: 9781337406659
Author: WINSTON, Wayne L.
Publisher: Cengage,
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Projects S and L are equally risky, mutually exclusive, and have
normal cash flows. Project S's IRR is 15%, while Project L's IRR is
12%. The two projects have the same NPV when the WACC is 7%.
Which of the following statements is CORRECT?
If the WACC for both projects is 10%, Project S will have a larger
NPV than Project L.
If the WACC for both projects is 18%, both projects will have
positive NPVs.
If the WACC for both projects is 13%, Project L will have a larger
NPV than Project S.
If the WACC for both projects is 9%, both projects will have
negative NPVs.
If the WACC for both projects is 6%, Project S will have a larger
NPV than Project L
18:21
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Transcribed Image Text:Projects S and L are equally risky, mutually exclusive, and have normal cash flows. Project S's IRR is 15%, while Project L's IRR is 12%. The two projects have the same NPV when the WACC is 7%. Which of the following statements is CORRECT? If the WACC for both projects is 10%, Project S will have a larger NPV than Project L. If the WACC for both projects is 18%, both projects will have positive NPVs. If the WACC for both projects is 13%, Project L will have a larger NPV than Project S. If the WACC for both projects is 9%, both projects will have negative NPVs. If the WACC for both projects is 6%, Project S will have a larger NPV than Project L 18:21
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