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You've estimated the following cash flows (in $ million) for two mutually exclusive projects: Year Project A Project B 0 -26 -41 1 30 45
You've estimated the following cash flows (in $ million) for two mutually exclusive projects:
Year | Project A | Project B |
0 | -26 | -41 |
1 | 30 | 45 |
2 | 40 | 50 |
Part 1
What is the crossover rate, i.e., the discount rate at which both projects have the same NPV?
Part 2
What is project A's NPV at the crossover rate?
Part 3
What is project B's NPV at the crossover rate?
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