Question
projects A and B are mutually exclusive projects. Project A requires an initial investment today of $300 and generates expected cash flows of $100 at
projects A and B are mutually exclusive projects. Project A requires an initial investment today of $300 and generates expected cash flows of $100 at the end of each of the next 5 year. Project B requires an initial investment today of $130 and generates expected cash flows of $45 at the end of the next 5 year.
a. if you plotted the NPV profiles, what would be the "crossover rate" in the graph? (note you are not asked to actually plot NPV profiles) . please make sure your supporting work shows either algebra or financial calculator input limited to the five financial time value of money keys (N, I or I/YR depending on calculator model, PV, PMT, and FV) showing excel input or output will not earn credit
b. What is the NPV of project A if the cost of capital is 20.0%? please make sure your supporting work shows either algebra or financial calculator input limited to the five financial time value of money keys (N, I or I/YR depending on calculator model, PV, PMT, and FV) showing excel input or output will not earn credit
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