Problem: I am considering 2 mutually exclusive projects. The projects have the following cash flows:
Year X Cash Flow Y Cash Flow
0 -10,000 -8,000
1 1,000 7,000
2 2,000 1,000
3 6,000 1,000
4 6,000 1,000
At what cost of capital do the two projects have the same net present value? (That is, what is the crossover rate?)