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.

Explaination

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).