Find the crossover rate, Company is considering investing

Find the crossover rate

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Reference no: EM131050879

Company is considering investing in two projects. The first project is the Tumbler project which is expected to cost $50 million and will result in cash flows of $60 million, $90 million and $20 million at the end of 1st, 2nd and 3rd year. The second project is the Bat project which is expected to cost $80 million, and will result in cash flows of $10 at the end of 1st year, zero at 2nd year, but it is expected to generate economic benefits of $250 million at the end of 3rd year. Find the crossover rate. If cost of capital is 16%, which project would you choose? Tumbler or Bart?

Reference no: EM131050879

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