You are evaluating two projects with the following cash flows: Year Project X Project Y 0...

You are evaluating two projects with the following cash flows:

Year	Project X	Project Y
0	−$552,600	−$521,000
1	217,700	207,400
2	227,600	217,200
3	234,800	225,100
4	194,500	185,900

What is the crossover rate for these two projects?

Solutions

Expert Solution

Solution :

The cross over rate for the two projects is = 9.28 %

Please find the attached screenshot of the excel sheet containing the detailed calculation for the solution.

jeff jeffy answered 2 months ago

Next > < Previous

Related Solutions

Matterhorn Mountain Gear is evaluating two projects with the following cash flows: year project x project...

Matterhorn Mountain Gear is evaluating two projects with the following cash flows: year project x project y 0 -319,400 -299,050 1 146,100 137,300 2 163,600 154,500 3 128,700 120,250 What interest rate will make the NPV for the projects equal? a)14.22% b)18.31% c)12.64% d).26% e)18.05%

The following are the cash flows of two projects: Year Project A Project B 0 ?$...

The following are the cash flows of two projects: Year Project A Project B 0 ?$ 380 ?$ 380 1 210 280 2 210 280 3 210 280 4 210 If the opportunity cost of capital is 11%, what is the profitability index for each project? (Do not round intermediate calculations. Round your answers to 4 decimal places.)

The following are the cash flows of two projects: Year Project A Project B 0 ?$...

The following are the cash flows of two projects: Year Project A Project B 0 ?$ 280 ?$ 280 1 160 180 2 160 180 3 160 180 4 160 If the opportunity cost of capital is 10%, what is the profitability index for each project? (Do not round intermediate calculations. Round your answers to 4 decimal places.) Project A Profitability Index Project B

The following are the cash flows of two projects: Year Project A Project B 0 −$...

The following are the cash flows of two projects: Year Project A Project B 0 −$ 290 −$ 290 1 170 190 2 170 190 3 170 190 4 170 If the opportunity cost of capital is 11%, what is the profitability index for each project? (Do not round intermediate calculations. Round your answers to 4 decimal places.)

The following are the cash flows of two projects: Year Project A Project B 0 $...

The following are the cash flows of two projects: Year Project A Project B 0 $ (330) $ (330) 1 160 230 2 160 230 3 160 230 4 160 If the opportunity cost of capital is 12%, what is the profitability index for each project? (Do not round intermediate calculations. Round your answers to 4 decimal places.) Project Profitability Index: A B

The following are the cash flows of two projects: Year Project A Project B 0 ?$...

The following are the cash flows of two projects: Year Project A Project B 0 ?$ 220 ?$ 220 1 100 120 2 100 120 3 100 120 4 100 If the opportunity cost of capital is 10%, what is the profitability index for each project? (Do not round intermediate calculations. Round your answers to 4 decimal places.)

The following are the cash flows of two projects: Year Project A Project B 0 $...

The following are the cash flows of two projects: Year Project A Project B 0 $ (260 ) $ (260 ) 1 140 160 2 140 160 3 140 160 4 140 a. Calculate the NPV for both projects if the opportunity cost of capital is 16%. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Project A Project B b. Suppose that you can choose only one of these projects. Which would you choose? Project A...

The following are the cash flows of two projects: Year Project A Project B 0 $(340)...

The following are the cash flows of two projects: Year Project A Project B 0 $(340) $(340) 1 170 240 2 170 240 3 170 240 4 170 A.) Calculate the NPV for both projects if the opportunity costs of capital is 15%. *(2 decimal places, do not round intermediate calculations) B.) Suppose you can choose one one of these projects, which would you choose?

The following are the cash flows of two projects: Year Project A Project B 0 −$330...

The following are the cash flows of two projects: Year Project A Project B 0 −$330 −$330 1 160 230 2 160 230 3 160 230 4 160 a. Calculate the NPV for both projects if the opportunity cost of capital is 17%. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Project NPV A $ B b. Suppose that you can choose only one of...

The cash flows for the two projects are as follows? ($ million): Project Year 0 Year...

The cash flows for the two projects are as follows? ($ million): Project Year 0 Year 1 Year 2 Year 3 Year 4 A - $ 100 $26 $28 $42 $52 B -$ 100 $52 $42 $28 $18 a. What is the IRR of each? project? b. What is the NPV of each project at your cost of? capital? c. At what cost of capital are you indifferent between the two? projects? d. What should you? do?

Subjects