You are comparing two mutually exclusive projects The crosso

You are comparing two mutually exclusive projects. The crossover point is 12.3 percent. You have determined that you should accept project A if the required return is 13.1 percent. This implies you should: Question 7 options:

A) always accept project A.

B) be indifferent to the projects at any discount rate above 13.1 percent.

C) always accept project A if the required return exceeds the crossover rate.

D) accept project B only when the required return is equal to the crossover rate.

E) accept project B if the required return is less than 13.1 percent.

Solution

The correct answer is : C

Always accept project A if the required return exceeds the crossover rate.