Question

Canfly Airlines is considering two mutually exclusive projects, Project A and Project B. The projects have the following cash flows (in millions of dollars):

Canfly Airlines is considering two mutually exclusive projects, Project A and Project B. The projects have the following cash flows (in millions of dollars):

Year

Project A Cash Flow

Project B Cash Flow

0

-$4.0

-$4.5

1

2.0

1.7

2

3.0

3.2

3

5.0

?

The crossover rate of the two projects’ NPV profiles is 9 percent. What is the cash flow for Project B at t = 3?


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