Crossover rate for two projects


Consider the following two mutually exclusive projects.

Year Cash Flow (X) Cash Flow (Y)

0 -$15,000 -$15,000

1 8,150 7,700

2 5,050 5,150

3 6,800 7,250

Sketch the NVP profiles for X and Y over a range of discount rates from zero to 2 percent.

What is the crossover rate for these two projects?

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Finance Basics: Crossover rate for two projects
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