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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.
  • Present values
  • Net present values✔️
  • IRRs
  • Profitability indexes
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.