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Question:
The NPV profile of Project A is steeper than that of Project B. Which of the following is most likely that the crossover point occurs at an NPV of $5,000?
A
Project A receives most of its cash flows later in its life.
explanation
The steeper NPV profile indicates that:
• Project A has higher total expected cash flows (higher y‐intercept).
More of Project A’s cash flows come later in its life.
• Project A has a lower IRR (lower x‐intercept).
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