Question

In: Finance

Projects A and B have the following cash flows respectively: Year 0 1 2 3 4...

  1. Projects A and B have the following cash flows respectively:

Year

0

1

2

3

4

CFA

−$2,050

   $750

   $760

   $770

   $780

CFB

−$4,300

$1,500

$1,518

$1,536

$1,554

Both projects have a required return of 10.25%.

  1. What are NPV and IRR of the two projects?
  2. If project A and B are mutually exclusive, what is your decision with regard to accepting vs. rejecting each project? Why?
  3. What is the crossover rate?

Solutions

Expert Solution

jeff jeffy answered 2 years ago
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