Projects S and L Are Equally Risky, Mutually Exclusive, and Have

Projects S and L are equally risky, mutually exclusive, and have normal cash flows. Project S has an IRR of 15%, while Project L's IRR is 12%. The two projects have the same NPV when the cost of capital is 7%. Which of the following statements is CORRECT?

A) if the cost of capital is 6%, project s will have the higher npv.
B) if the cost of capital is 13%, project s will have the lower npv.
C) if the cost of capital is 10%, both projects will have a negative npv.
D) project s's npv is more sensitive to changes in cost of capital than project l's.
E) if the cost of capital is 10%, both projects will have positive npvs.

Correct Answer:

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