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CSS Audit Tax Finance P-II
QUESTION #1228
Question 1
The discount rate at which two projects have identical _________ is referred to as Fisher's rate of intersection.
Correct Answer Explanation
Fisher's rate of intersection (or Fisher's rate) is the discount rate at which the NPVs of two mutually exclusive projects are equal — the crossover rate. At this rate, both projects have identical Net Present Values. Below this rate, one project is preferred; above it, the other is preferred. It is used to resolve conflicts between NPV and IRR rankings.
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