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The firm A is considering two investment projects (A and B). They both take 3 years to complete and require an initial investment outlay of
The firm A is considering two investment projects (A and B). They both take 3 years to complete and require an initial investment outlay of 200,000.
1) The firm expects the following cash flows from project A: CF1=20,000; CF2=120,000; CF3=160, 000.
2) The firm expects the following cash flows from project B: CF1=140,000; CF2=100,000; CF3=40,000.
Question: Do NPV profiles of these two projects cross over? What's the cross over rate?
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