How does higher WACC affect NPV? How does higher WACC affect IRR? If interest rates are high, what type of project do you want to invest in? Draw NPV profile for these 2 projects and calculate the crossover rate. Describe the conflict area on the graph, and which project is better in the conflict area?
Project 1 cash flows are: -2M; 400K; 500K; 600K; 3.2 million
Project 2 cash flows are: -2 million; 2.7 million; 400K; 300K; 200K