Projects A and B are mutually exclusive and both have an initial
cost of $3,000. Annual Cash flows are following the table. What is
the crossover rate (i.e. At what discount rate would the company be
indifferent between these two projects)?
| CFs | CFs |
Year | Project A | Project B |
0 | -3,000 | -3,000 |
1 | 500 | 2,000 |
2 | 500 | 1,000 |
3 | 1,500 | 600 |
4 | 2,000 | 500 |
A. |
6.33 percent |
|
B. |
14.25 percent |
|
C. |
18.82 percent |
|
D. |
7.99 percent |
|
E. |
9.17 percent |
Projects A and B are mutually exclusive and both have an initial cost of $3,000. Annual...
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