Question
George is interested in buying one of the two local businesses on sale: a Coffee Shop or a Shoe Store. The cashflows of both the
George is interested in buying one of the two local businesses on sale: a Coffee Shop or a Shoe Store. The cashflows of both the businesses are shown below. George can borrow from a bank at a rate of 8.00% to buy Coffee Shop and 6.00% to buy Shoe Store
| Coffee Shop | Shoe Store | Year |
| -$115,000 | -$115,000 | 0 (Purchase Price) |
| $7,188 | $51,750 | 1 |
| $21,562 | $38,812 | 2 |
| $40,250 | $28,750 | 3 |
| $50,315 | $21,563 | 4 |
| $57,500 | $14,375 | 5 |
How much is the crossover rate of these projects? At crossover rate, both projects have the same NPV. Enter your answer in the following format: 0.1234; Hint: Answer is between 0.0897 and 0.1141
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The Handbook Of Post Crisis Financial Modelling
Authors: Emmanuel Haven, Philip Molyneux, John Wilson, Sergei Fedotov, Meryem Duygun
1st Edition
1137494484, 978-1137494481
