Question
Moerdyk & Co. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable.
Moerdyk & Co. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. What is the cross-over rate?
| WACC: | 6.75% |
|
|
|
|
|
| 0 | 1 | 2 | 3 | 4 |
| CFS | -$2,400 | $250 | $450 | $1050 | $1500 |
| CFL | -$1,025 | $100 | $200 | $500 | $800 |
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Essentials of Managerial Finance
Authors: Scott Besley, Eugene F. Brigham
14th edition
324422709, 324422702, 978-0324422702
