Solved: Projects having the same net present value, Finance Basics

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Projects having the same net present value

Problem: Jackson Jets is considering two mutually exclusive projects. The projects have the following cash flows:

Project A Project B
Year    Cash Flow    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?)

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Finance Basics: Projects having the same net present value

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