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Project A has initial cost of $40,000, and annual cash flow of $49,400, $27,200, and $24,500...

Project A has initial cost of $40,000, and annual cash flow of $49,400, $27,200, and $24,500 in years 1, 2, and 3, respectively. Project B has same initial cost of $40,000 but an annual cash inflow of $18,500 for 4 years. These are mutually exclusive projects. What is the crossover rate?

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Expert Solution

crossover rate is the rate at which discount rate the NPV of both project are the same

The crossover rate is -30.89%

jeff jeffy answered 2 years ago
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