. What is the crossover rate, and what is its significance? Cash flow differential Take the cash flow differences of the two projects and calculate IRR to get the cross over rate Time 0 1 2 3 4 Crossover rate- (5375) (5300) (S200) (8100) $600 S600 5926 ($200) (5575) $190 $190 $190 $190 $190 $190 5 The crossover rate represents the cost of capital at which the two projects have the same net present value. In this scenario, that common net present value, at a cost of capital of 13.13%, is: 6 7 SO