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ABC Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. The
ABC Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. The firms WACC is 12%.
(a) What is the crossover IRR value for these two projects (make sure you have the correct units). You must show the equation that you are solving to receive full credit. (10 points).
WACC Year CFS CFL 0.12 0 -$1,000 -$2,153 1 $385 $760 2 $385 $760 3 $385 $760 4 $370 $780 IRR NPV InterceptStep by Step Solution
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