Find the cross over rate

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Consider the following mutually exclusive investments

T=              0             1          2          3

Project X:-150            30          60      120
Project Y:- 150          110           30      60

Problem a. Find IRRs for both projects.

Problem b. Find the cross over rate. Show the formula you need to use (in symbols) and with numbers plugged in.

Problem c. Draw a graph (NPV schedule), where you will show the NPV of each project as a function of its discount rate (i.e., NPV on the vertical axis and r on the horizontal axis). Both NPVs should be on the same graph.

Problem d. Please describe as fully as possible which project is the best and under which circumstances.

Reference no: EM132942698

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