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 7.00% to buy Coffee Shop and 6.00% to buy Shoe Store

Coffee Shop	Shoe Store	Year
-$100,000	-$100,000	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 NPV at crossover rate? At the crossover rate, both projects have the same NPV.

Enter your answer in the following format: + or - 12345;

Hint: Answer is between 21,509 and 26,527

Answer rating: 100% (QA)

Given Cashflows for the Coffee Shop 100000 7188 21562 40250 50315 57500 Cashflows for the Shoe Store ... View the full answer