Determine what is the crossover rate

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YEAR            PROJECT A           PROJECT B

0                -$275,000             -$202,000

1                      0                      113,600

2                      0                       81,900

3                      360,000              47,000

Question 1: You are considering two mutually exclusive projects with the following cash flows. Which project(s) should you accept if the discount rate is 7 percent? What if the discount rate is 10 percent?

Question 2: Radiology Associates is considering an investment which will cost $259,000. The investment produces no cash flows for the first year. In the second year, the cash inflow is $58,000. This inflow will increase to $150,000 and then $200,000 for the following two years before ceasing permanently. The firm requires a 14 percent rate of return and has a required discounted payback period of three years. Accept or reject this project? Why?

Question 3: You are analyzing the following two mutually exclusive projects and have developed the following information. What is the crossover rate?

Reference no: EM132554621

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