Lancaster Corp

Lancaster Corp. is considering two equally risky, mutually exclusive projects, both of which have normal cash flows. Project A has an IRR of 11%, while Project B's IRR is 14%. When the cost of capital is 8%, the projects have the same NPV. Given this information, which of the following statements is CORRECT?

A) if the cost of capital is 9%, project a's npv will be higher than project b's.
B) if the cost of capital is 6%, project b's npv will be higher than project a's.
C) if the cost of capital is greater than 14%, project a's irr will exceed project b's.
D) if the cost of capital is 9%, project b's npv will be higher than project a's.
E) if the cost of capital is 13%, project a's npv will be higher than project b's.

Correct Answer:

Verified

Show Answer