Question
Your dress shoe company is considering expansion into the luxury kicks market. Your stakeholders require a return of 8% on their investments. You have two
Your dress shoe company is considering expansion into the luxury kicks market. Your stakeholders require a return of 8% on their investments. You have two possible avenues into this market: Project 1: A Prada/Gucci Clone Initial Investment Cost = $10,000,000 at t=0 Net Operating Cash flows = $16,000,000 at t=1 Project 2: A new type of luxury shoe Initial Investment Cost = $20,000,000 at t = 0 Net Operating Cash flows = $26,000,000 at t=1, $6,000,000 at t=2, $6,000,000 at t=3 What is the crossover rate? Answer in percent form without a % (enter x.xx% as x.xx, not 0.0xxx)
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