Crossover rate for two projects


Problem:

Seether has the following two mutually exclusive 5 year projects available: Project R= year 0, -82000: year 1, 28800; year 3, 27800; year4, 19800; year 5, 10600. Project S = year0, -101600' year1, 25400; year 2, 25400; year 3, 40400; year 4, 35400; year 5, 14400.

Required:

Question 1: What is the crossover rate for these two projects?

Question 2: What is the NPV of each project at the crossover rate?

Note: Explain all calculation and formulas.

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Accounting Basics: Crossover rate for two projects
Reference No:- TGS0885817

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