Cummings Products is considering two mutually exclusive investments whose expected net cash flows are as follows: a.

Question:

Cummings Products is considering two mutually exclusive investments whose expected net cash flows are as follows:

a. Construct NPV profiles for Projects A and B.
b. What is each project's IRR?
c. 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?
d. What is each project's MIRR at the cost of capital of 10%? At 17%?
e. What is the crossover rate, and what is its significance?

Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...