NPV versus IRR. Consider the following two mutually exclusive projects:
Year | Cash Flow (X) | Cash Flow (Y) |
0 | −$15,000 | −$15,000 |
1 | 6,800 | 7,470 |
2 | 7,380 | 7,640 |
3 | 4,900 | 3,810 |
Sketch the NPV profiles for X and Y over a range of discount rates from zero to 25 percent. What is the crossover rate for these two projects?
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