Murray Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. The CEO wants to use the IRR criterion, while the CFO favors the NPV method. You were hired to advise Murray on the best procedure. What is the crossover rate between the two projects, i.e. the rate at which Murray Inc. would be indifferent between the two projects? WACC: 6.00% Year CFS -$1,025 CFL -$2,150 O 16.48% O 6.00% O 13.86% 0 O 11.53% 1 2 3 $380 $380 $380 $380 $765 $765 $765 $765

Murray Inc. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. The CEO wants to use the IRR criterion, while the CFO favors the NPV method. You were hired to advise Murray on the best procedure. What is the crossover rate between the two projects, i.e. the rate at which Murray Inc. would be indifferent between the two projects? 16.48% 6.00% 13.86% 11.53%