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12. Mayfair Corporation is considering two mutually exclusive projects, S and L. The net after tax cash flows are: Year Project S Project L 0
12. Mayfair Corporation is considering two mutually exclusive projects, S and L. The net after tax cash flows are:
Year | Project S | Project L |
0 | -$10,000 | -$10,000 |
1 | $6,000 | $1,000 |
2 | $4,000 | $3,000 |
3 | $3,000 | $4,000 |
4 | $2,000 | $8,000 |
At what WACC would the NPVs of Project S and Project L be equal (Hint: compute the crossover discount rate)?
Group of answer choices
a. 4.45%
b. 5.90%
c. 6.74%
d. 8.28%
e. 9.11%
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