Explain Determining cross over rate by computing net present value
Suppose that the riskiness of the projects is identical. Create an NPV profile and determine the cross over rate. What does this tell us about the characteristics of the two projects?
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Project
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Cost ($)
|
Cash Flow 1 ($)
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Cash Flow 2 ($)
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Cash Flow 3 ($)
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|
|
|
|
|
|
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Alpha
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$10,000
|
$2,000
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$5,000
|
$7,000
|
|
Gamma
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$10,000
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$6,000
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$7,000
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$3,000
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