Question
Two projects being considered are mutually exclusive and have the following projected cash flows: Year Project A Project B 0 -$50,000 -$ 50,000 1 15,990
Two projects being considered are mutually exclusive and have the following projected cash flows:
| Year | Project A | Project B |
| 0 | -$50,000 | -$ 50,000 |
| 1 | 15,990 | 0 |
| 2 | 15,990 | 0 |
| 3 | 15,990 | 0 |
| 4 | 15,990 | 0 |
| 5 | 15,990 | 100,560 |
At what rate (approximately) do the NPV profiles of Projects A and B cross?
a. 6.5%
b. 11.5%
c. 16.5%
d. 20.0%
e. The NPV profiles of these two projects do not cross.
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Valuation Measuring and managing the values of companies
Authors: Mckinsey, Tim Koller, Marc Goedhart, David Wessel
5th edition
978-0470424650, 9780470889930, 470424656, 470889934, 978-047042470
