Question

you are considering the following two mutually exclusive projects. the crossover point is ______ and Project ______ should be accepted if the discount rate is 14 percent. year, project A, project B, 0, -43000, -43000, 1, 18000, 29000, 2, 18000, 14000, 3, 28000, 21000.

Answer 1

rate positively .. formula in pic..

		Cash flow			Present value
	Year	A	B	Delta	PVIF @ 14%	A	B
	0	-43000	-43000	0	1	(43,000.00)	(43,000.00)
	1	18000	29000	-11000	0.877193	15,789.47	25,438.60
	2	18000	14000	4000	0.769468	13,850.42	10,772.55
	3	28000	21000	7000	0.674972	18,899.20	14,174.40
		NPV =				5,539.09	7,385.54
Ans 1
Cross over rate =			0.00%
Ans 2	if the required rate is 14% than project B should be selected because it has higher NPV
you are considering the following two mutually exclusive projects. the crossover point is __0%____ and Project _B_____ should be accepted if the discount rate is 14 percent.