Question
Your division is considering two projects. Its WACC is 10%, and the projects after-tax cash flows (in millions of dollars) would be as follows: Time
Your division is considering two projects. Its WACC is 10%, and the projects after-tax cash flows (in millions of dollars) would be as follows:
| Time | 0 | 1 | 2 | 3 | 4 |
| Project A | -$30 | $5 | $10 | $15 | $20 |
| Project B | -$30 | $20 | $10 | $8 | $6 |
e) The crossover rate is 13.5252%. Explain what this rate is and how it affects the choice between mutually exclusive projects.
f) Define the MIRR. Whats the difference between the IRR and the MIRR, and which generally gives a better idea of the rate of return on the investment in a project? Explain
.
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Routledge Handbook Of Social And Sustainable Finance
Authors: Othmar M. Lehner
1st Edition
1138343773, 978-1138343771
