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Consider two mutually exclusive projects:

Project A initially cost $50,000 and will generate cash flows of $10,000 for six years

Project B initially cost $100,000 and will generate cash flows of $10,000 for three years and then $85,000 in year four.

1. What is the crossover rate?

2. What projectwould you choose if discount rate is 2% ?

3. What projectwould you choose if discount rate is 4% ?

4. What projectwould you choose if discount rate is 8% ?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92772748

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