You have to choose between two mutually exclusive projects A and B. The cash-flows and the IRRs for the two projects, as well as for the incremental project A – B, are presented in the table below:
Is the NPV-function for projects A, B and A – B upward-sloping or downward-sloping? Briefly motivate your answer.
For what range of discount rates should you choose project A and for what range of discount rates should you choose project B?