Question B3 1 Define cross over rate Discuss the significance of cross over rate in decision making (3 marks) Ajmox Ltd has hired you to advise the company on a capital budgeting issue involving two mutually exclusive projects, Spartan and Trojan The cash flows from the two projects are presented in the following table Question B3 1 Define cross over rate Discuss the significance of cross over rate in decision making (3 marks) Ajmox Ltd has hired you to advise the company on a capital budgeting issue involving two mutually exclusive projects, Spartan and Trojan The cash flows from the two projects are presented in the following table Cash flows Year 0 1 2 3 4 5 Spartan $120,000 $30,000 $40,000 $60,000 $80,000 Trojan $140,000 $50,000 $50,000 $50,000 $50,000 $50,000 If the companys required rate of return on both projects is 10 , advise Ajmox Ltd on which project they should undertake and why Use the Equivalent Annual Annuity (EAA) or Equivalent Annual Cost (EAC) (as appropriate) method to identify which option should be chosen and explain the reasoning for your decision (Show formula and all calculations) If the companys required rate of return on both projects is 10 , advise Ajmox Ltd on which project they should undertake and why Use the Equivalent Annual Annuity (EAA) or Equivalent Annual Cost (EAC) (as appropriate) method to identify which option should be chosen and explain the reasoning for your decision (Show formula and all calculations) (8 marks)

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Question: B3.1 Define cross over rate. Discuss the significance of cross over rate in decision making. (3 marks) Ajmox Ltd has hired you to advise

Question: B3.1

Define cross over rate. Discuss the significance of cross over rate in decision making. (3 marks)
Ajmox Ltd has hired you to advise the company on a capital budgeting issue involving two mutually exclusive projects, Spartan and Trojan. The cash flows from the two projects are presented in the following table:

Question: B3.1

Define cross over rate. Discuss the significance of cross over rate in decision making. (3 marks)
Ajmox Ltd has hired you to advise the company on a capital budgeting issue involving two mutually exclusive projects, Spartan and Trojan. The cash flows from the two projects are presented in the following table:

Cash flows
Year	0	1	2	3	4	5
Spartan	-$120,000	$30,000	$40,000	$60,000	$80,000
Trojan	-$140,000	$50,000	$50,000	$50,000	$50,000	$50,000

If the companys required rate of return on both projects is 10%, advise Ajmox Ltd on which project they should undertake and why. Use the Equivalent Annual Annuity (EAA) or Equivalent Annual Cost (EAC) (as appropriate) method to identify which option should be chosen and explain the reasoning for your decision (Show formula and all calculations).