Totally Serial Enterprises is considering the two mutually exclusive projects below. The cash flows from the projects
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Question:
Totally Serial Enterprises is considering the two mutually exclusive projects below. The cash flows from the
projects are summarized below.
Year
ManBearPig Project Cash Flow
0 -$100,000 1. 40,000 2. 45,000 3. 50,000 4. 55,000
Flying Car Cash Flow
0 -165,000 1. 55,000 2. 60,000 3. 75,000 4. 90,000
At what interest rate do the two projects have the same NPV, i.e., what's the crossover rate between the two projects?
A. 13.1% B. 8.6% C. 7.8% D. 9.5% E. 12.2%
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