Question
I cannot figure this one out! NPV profile of two mutually exclusive projects . Moulton Industries has two potential projects for the coming? year, Project?
I cannot figure this one out!
NPV profile of two mutually exclusive
projects.
Moulton Industries has two potential projects for the coming? year, Project? B-12 and Project? F-4. The two projects are mutually exclusive. The cash flows are listed in the following table. Draw the NPV profile of each? project, and determine their crossover rate. If the appropriate hurdle rate is? 8% for both?projects, which project does Moulton Industries? choose?
??Cash Flow | Project? B-12 | Project? F-4 |
| ||
??Year 0 | ??$4,210,000 | ??$3,780,000 | |||
??Year 1 | ?$2,050,000 | ?$0 | |||
??Year 2 | ?$2,050,000 | ?$1,050,000 | |||
??Year 3 | 2,050,000 | ?$1,500,000 | |||
??Year 4 | ?$0 | ?$2,060,000 | |||
??Year 5 | ?$0 | ?$2,460,000 |
What is the crossover rate of the two? projects?
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