Question
In: Finance
Anderson Associates is considering two mutually exclusive projects that have the following cash flows: Project A...
Anderson Associates is considering two mutually exclusive projects that have the following cash flows: Project A Project B Year Cash Flow Cash Flow 0 -$11,000 -$9,000 1 3,500 6,000 2 3,000 4,000 3 5,000 3,000 4 9,000 2,000 At what cost of capital do the two projects have the same net present value? (That is, what is the crossover rate?) Enter your answer rounded to two decimal places. Do not enter % in the answer box. For example, if your answer is 0.12345 or 12.345% then enter as 12.35 in the answer box.
Solutions
Expert Solution
Solution :
Thus the cost of capital at which the two projects have the same net present value, that is, the crossover rate = 17.93 %
Thus the solution is 17.93
Please find the attached screenshot of the excel sheet containing the detailed calculation for the above solution.
jeff jeffy answered 1 year agoRelated Solutions
Anderson Associates is considering two mutually exclusive projects that have the following cash flows: Project A...
Anderson Associates is considering two mutually exclusive
projects that have the following cash flows: Project A Project B
Year Cash Flow Cash Flow 0 -$10,000 -$8,000 1 4,000 7,000 2 2,000
3,000 3 6,000 1,000 4 8,000 3,000 At what cost of capital do the
two projects have the same net present value? (That is, what is the
crossover rate?) Enter your answer rounded to two decimal places.
Do not enter % in the answer box. For example, if your...
Anderson Associates is considering two mutually exclusive projects that have the following cash flows: Project A...
Anderson Associates is considering two mutually exclusive
projects that have the following cash flows: Project A Project B
Year Cash Flow Cash Flow 0 -$11,000 -$9,000 1 3,500 6,000 2 3,000
4,000 3 5,000 3,000 4 9,000 2,000 At what cost of capital do the
two projects have the same net present value? (That is, what is the
crossover rate?) Enter your answer rounded to two decimal places.
Do not enter % in the answer box. For example, if your...
Anderson Associates is considering two mutually exclusive projects that have the following cash flows: Project A...
Anderson Associates is considering two mutually exclusive
projects that have the following cash flows: Project A Project B
Year Cash Flow Cash Flow
0 -$11,000 -$9,000
1 4,500 6,000
2 3,000 4,000
3 5,000 3,000
4 9,000 2,000
At what cost of capital do the two projects have the same net
present value? (That is, what is the crossover rate?) Enter your
answer rounded to two decimal places. Do not enter % in the answer
box. For example, if your...
A company is considering two mutually exclusive projects that have the following cash flows: Year Project...
A company is considering two mutually exclusive projects that
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Project B Cash Flow
0
-$10,000
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1
1000
7000
2
2000
1000
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6000
1000
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6000
1000
If the company’s required rate of return is 10%, find the
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Two mutually exclusive projects have the following forecasted cash flows:
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Year A B
0 -20,000 -20,000
1 10,000 0
2 10,000 0
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Compute the internal rate of return for each project.
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the following cash flows:
Year
Project A
Project B
0
-$50,000
-$50,000
1
15,000
0
2
15,000
0
3
15,000
0
4
15,000
0
5
15,000
90,000
1) Calculate NPV of each project if
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Year XX YY
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1 $800 $700
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Robin Hood Industries is considering two mutually exclusive projects with the following projected cash flows: Project...
Robin Hood Industries is considering two mutually exclusive
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Project B
Initial Investment
-R635 000,00
-R1 300 000,00
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Year 1
R120 000,00
R344 000,00
Year 2
R200 000,00
R300 000,00
Year 3
R90 000,00
R200 000,00
Year 4
R200 000,00
R200 000,00
Year 5
R120 000,00
R200 000,00
Year 6
R180 000,00
R300 000,00
Year 7
R180 000,00
R400 000,00
Year 8
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Based on the...
You've estimated the following cash flows (in $) for two mutually exclusive projects: Year Project A...
You've estimated the following cash flows (in $) for two
mutually exclusive projects:
Year
Project A
Project B
0
-5,200
-7,800
1
1,325
1,325
2
2,148
2,148
3
3,640
7,360
The required return for both projects is 8%.
1. What is the IRR for project A?
2. What is the IRR for project B?
3. Which project seems better according to the IRR method?
4. What is the NPV for project A?
5. What is the NPV for project B?...
You've estimated the following cash flows (in $) for two mutually exclusive projects: Year Project A...
You've estimated the
following cash flows (in $) for two mutually exclusive
projects:
Year
Project A
Project B
0
-5,700
-8,550
1
1,325
1,325
2
2,148
2,148
3
4,325
8,384
The required return
for both projects is 8%.
What is the IRR for
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What is the IRR for
project B?
Which project seems
better according to the IRR method?
Project A
Project B
What is the NPV for project A?
What is the NPV for project B?
Which...
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