Question
A firm is considering Projects S and L, whose cash flows are shown below.These projects are mutually exclusive, equally risky, and not repeatable.The CEO wants
A firm is considering Projects S and L, whose cash flows are shown below.These projects are mutually exclusive, equally risky, and not repeatable.The CEO wants to use the IRR criterion, while the CFO favors the NPV method.You were hired to advise the firm on the best procedure.What is the crossover point(in percent to two places without the %sign)?
WACC:6.00%
Year01234
CFS-$1,025$380$380$380$380
CFL-$2,150$765$765$765$765
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Entrepreneurial Finance
Authors: J. Chris Leach, Ronald W. Melicher
6th edition
1305968352, 978-1337635653, 978-1305968356
