Which of the following statements about the Cross-Over Rate is CORRECT? At the Cross-Over Rate the...
Which of the following statements about the Cross-Over Rate is CORRECT?
- At the Cross-Over Rate the NPV of both investments is the same.
- If the IRRs of the two investments are the same, there is no Cross-Over Rate.
- The Cross-Over Rate is independent of the WACC.
- The Cross-Over Rate is the same as the MIRR of each project.
- The Cross-Over Rate is always a positive number.
Homework Answers
The correct answer is (a) At the Cross-Over Rate the NPV of both investments is the same.
Crossover rate is the cost of capital at which the net present values of two projects are equal.
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