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Crossover rate-profitability index

**Task1**. Consider the following two mutually exclusive projects:

Year Cash Flow (X) Cash Flow (Y)

0 –$19,100 –$19,100

1 8,625 9,650

2 8,650 7,575

3 8,575 8,475

**Question1**. Calculate the IRR for each project.

**Question2**. What is the crossover rate for these two projects?

**Question3**. What are the NPV of Projects X and Y at discount rates of 0%, 15%, and 25%? (Negative amount should be indicated by a minus sign.

**Task2**. The Angry Bird Corporation is trying to select between the following two reciprocally exclusive design projects:

Year Cash Flow (I) Cash Flow (II)

0 –$69,000 –$17,500

1 31,000 9,450

2 31,000 9,450

3 31,000 9,450 **Question1**. If the needed return is 10 percent, what is the profitability index for the both projects?

**Question2**. If the company applies the profitability index decision rule, which project must the firm accept?

**Question4**. What is the NPV for the both projects?

**Question5**. If the company applies the NPV decision rule, which project must it take?

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## Q : Calculating the npv for fairways driving range

The project will have an initial working capital requirement of $5,000 and this requirement will be 10% of all revenues after that. The company’s required rate of return for this project is 20%. Please complete the tables to calculate the NP