What is the crossover rate and the significance

Reference no: EM131937439

Question: Assume you are presented with the following mutually exclusive investments whose expected net cash flows are as follows:

Year	Project A	Project B
0	-$400	-$650
1	-528	210
2	-219	210
3	-150	210
4	1,100	210
5	820	210
6	990	210
7	-325	210

1. (a) What is each project's IRR?

(b) If each project's cost of capital were 10%, which project, if either, should be selected? If the cost of capital were 17%, what would be the proper choice?

2. What is each project's MIRR at the cost of capital of 10%? At 17%? (Hint: Consider Period 7 as the end of Project B's life.)

3. What is the crossover rate, and what is its significance?

Reference no: EM131937439

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