Question

Consider the following two mutually exclusive projects: Year 0 Cash Flow (X) -$15,600 6,740 7,320 4,840 Cash Flow (Y) -$15,600 7,350 7,700 3,690 3 a. What is the IRR of Project X? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the IRR of Project Y? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is the crossover rate for these two projects? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. IRR b. IRR c. Crossover rate

Answer 1

G191 EIRR(G186:G189) F a&b 177 Year 0 1 2 3 IRR IRR Cashflows(x) Cashflows(Y) $ (15,600.00) $ (15,600.00) $ 6,740.00 $ 7,350.00 $ 7,320.00 $ 7,700.00 $ 4,840.00 $ 3,690.00 IRR(values) IRR(values) 10.81% 10.87% 185 | Year 0 1 2 3 188 189 190 Cashflows(x) Cashflows(Y) | Difference in cashflows $ (15,600.00) $ (15,600.00) $ $ 6,740.00 $ 7,350.00 $ 610.00 $ 7,320.00 $ 7,700.00 $ 380.00 $ 4,840.00 $ 3,690.00 $ (1,150.00) Cross over rate IRR(values) Cross over rate 9.65%

G191 for IRR(G186:G189) D a&b Year 175 176 177 178 179 180 181 182 183 Cashflows(X) - 15600 6740 7320 4840 IRR(values) =IRR(E177:E180) Cashflows(Y) - 15600 7350 7700 3690 IRR(values) =IRR(F177:F180) IRR IRR 184 Year Difference in cashflows 185 186 187 188 189 Cashflows(X) - 15600 6740 7320 4840 Cashflows(Y) -15600 7350 7700 3690 Cross over rate Cross over rate =F186-E186 =F187-E187 =F188-E188 =F189-E189 190 IRR(values) 191 =IRR( G186:6189) 192 193