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Projects A and B are mutually exclusive and have the following cash flows: Year Project A Project B 0 -$82,000 -$82,000 1 34,000 0 2
Projects A and B are mutually exclusive and have the following cash flows:
Year | Project A | Project B |
0 | -$82,000 | -$82,000 |
1 | 34,000 | 0 |
2 | 34,000 | 0 |
3 | 34,000 | 108,000 |
1. What is the crossover rate?
2. Do we have a conflict in ranking between the NPV and IRR methods if the required rate of return is 8%?
3. Which project should be accepted if the required rate of return is 5%?
4. Which project should be accepted if the required rate of return is 12%?
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