Project X's IRR is 19% and Project Y's IRR is 17%. The projects have the same risk and the same lives, and each has constant cash flows during each year of their lives. If the WACC is 10%, Project Y has a higher NPV than X. Given this information, which of the following statements is CORRECT?
a. The crossover rate must be less than 10%.
b. The crossover rate must be greater than 10%.
c. If the WACC is 8%, Project X will have the higher NPV.
d. If the WACC is 18%, Project Y will have the higher NPV.
e. Project X is larger in the sense that it has the higher initial cost.
Anderson Systems is considering a project that has the following cash flow and WACC data. What is the project's NPV? Note that if a project's expected NPV is negative, it should be rejected.
WACC: 9.00%
Year 0 1 2 3
Cash flows $1,000 $500 $500 $500
a. $265.65
b. $278.93
c. $292.88
d. $307.52
e. $322.90