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Project X has a cost of $750 and a three-year annual cash flow of $350 per year. Project Y has a cost of $500 and
Project X has a cost of $750 and a three-year annual cash flow of $350 per year. Project Y has a cost of $500 and a three-year annual cash flow of $300, $225 and $200. Given this information, i. Calculate the IRR cross-over rate ii. Calculate the corresponding NPV that the cross-over rate provides. iii. Interpret the cross-over rate in terms of acceptance/rejection of projects A and B. Which project is accepted for required rates lower (higher) than the cross-over rate? Why?
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