Dereks donuts is considering 2 mutually exclusive, Ask an Expert

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problem: Derek's Donuts is considering 2 mutually exclusive investments. The projects expected net cash flows are as follows:

Expected Net Cash Flows

Year	Project A	Project B
0	$(300)	$(405)
1	(387)	134
2	(193)	134
3	(100)	134
4	500	134
5	500	134
6	850	134
7	100	0

[A] Make NPV profiles for Projects A & B.

[B] Determine each project's IRR?

[C] If you were told that cash project's required rate of return was 12%, which project should be selected? If the required rate of return was 15%, what would be the proper choice?

[D] Looking at the NPV profiles constructed in part [A], what is the approximate crossover rate, & determines its significance?

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M917934

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