Question
Use the following information to answer the next four questions. The cash flows for two mutually exclusive projects are shown in the following table. Investors
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Use the following information to answer the next four questions.
The cash flows for two mutually exclusive projects are shown in the following table. Investors require a 7% rate of return for each project.
Year
Cash Flows: Project C (in millions)
Cash Flows: Project D (in millions)
0
-160
-160
1
-35
50
2
50
40
3
50
40
4
-20
-30
5
90
60
6
95
60
Find the profitability index for project D. Round intermediate steps and your final answer to four decimals.
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Which project or projects would you take based on the profitability index?
C
D
C&D
You'd be indifferent between accepting and rejecting C or D
None of the above
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Find the crossover rate. Round your final answer to four decimals and enter it in decimal format (.XXXX)
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Find project C's MIRR.
8.1254%
7.1504%
6.1257%
9.3264%
None of the above
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