You are analyzing the following two mutually exclusive projects and information. Please calculate the IRRS for the two projects and the cr project should you accept if the cost of capital is 5%, and which proj- of capital is 10%? Year 0 1 2 Project A Cash Flow -$84,500 $29,000 $40,000 $27,000 IRR A: IRR B: Crossover Rate: If WACC-5%, accept If WACC-10%, accept Project B Cash Flow -$76,900 $25,000 $35,000 $26,000

Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter10: The Basics Of Capital Budgeting: Evaluating Cash Flows
Section: Chapter Questions
Problem 23SP: Start with the partial model in the file Ch10 P23 Build a Model.xlsx on the textbooks Web site....
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3. You are analyzing the following two mutually exclusive projects and have developed the following
Which
information. Please calculate the IRRS for the two projects and the crossover rate.
project should you accept if the cost of capital is 5%, and which project should you accept if the cost
of capital is 10%?
Year
0
1
3
Project A
Cash Flow
-$84,500
$29,000
$40,000
$27,000
IRR A:
IRR B:
Crossover Rate:
If WACC-5%, accept
If WACC=10%, accept
Project B
Cash Flow
-$76,900
$25,000
$35,000
$26,000
J
Transcribed Image Text:3. You are analyzing the following two mutually exclusive projects and have developed the following Which information. Please calculate the IRRS for the two projects and the crossover rate. project should you accept if the cost of capital is 5%, and which project should you accept if the cost of capital is 10%? Year 0 1 3 Project A Cash Flow -$84,500 $29,000 $40,000 $27,000 IRR A: IRR B: Crossover Rate: If WACC-5%, accept If WACC=10%, accept Project B Cash Flow -$76,900 $25,000 $35,000 $26,000 J
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