What is the cross-over rate between the two projects


Assignment:

Cash Flows
Years    Project A    Project B
0    $ (500,000.00)    $ (500,000.00)
1    $ 80,000.00    $ 280,000.00
2    $ 130,000.00    $ 230,000.00
3    $ 180,000.00    $ 180,000.00
4    $ 270,000.00    $ 130,000.00
5    $ 300,000.00    $ 80,000.00

Question 1: If the weighted average cost of capital for the firm is 4% and the projects are mutually exclusive, which project would you choose based upon the NPV rule?

Question 2: If the weighted average cost of capital for the firm is 4% and the projects are independent, which project would you choose based upon the NPV rule?

Question 3: If the weighted average cost of capital for the firm is 18% and the projects are mutually exclusive, which project would you choose based upon the NPV rule?

Question 4: What is the Internal Rate of Return for Project A?

Question 5: What is the Payback for Project B?

Question 6: What is the Discounted Payback for Project A?

Question 7: What is the Profitability Index for Project A?

Question 8: What is the Discounted Profitability Index for Project B?

Question 9: What is the Cross-Over Rate Between the two Projects?

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Finance Basics: What is the cross-over rate between the two projects
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