Question
You will use the following information to answer 3 different questions (I will repeat it again, but it is the same information). You have two
You will use the following information to answer 3 different questions (I will repeat it again, but it is the same information). You have two mutually exclusive projects. You estimate the following payoffs of each project. Project Rome: Year 0 $-20,000; Year 1 $10,000; Year 2 $30,000. Project Venice: Year 0 $-80,000; Year 1 $75,000; Year 2 $30,000. At what range of discount rates (if any) would you reject both project?
- if discount rate is less than the crossover rate
- if discount rate is greater than IRR of project Venice
- if discount rate is greater than the crossover rate
- if discount rate is greater than IRR of project Rome
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