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# 1 6 . Shannon Industries is considering a project which has the following cash flows: Year Cash Flow 0 ? 1 $ 2 , 0

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$16.$ Shannon Industries is considering a project which has the following cash flows: Year Cash Flow $0$ $?$ $1$ $$2,000$ $2$ $3,000$ $3$ $3,000$ $4$ $1,500$ The project has a payback of $2\mathrm{.}5$ years. The firm's cost of capital is $12$ percent. What is the project's net present value NPV$?$ Round it to a whole dollar, e$.$g$.,\text{}1234.$ $17.$ McCarver Inc. is considering the following mutually exclusive projects: Project A Project B Year Cash Flow Cash Flow $0$ $-$$$5,000$ $-$$$5,000$ $1$ $200$ $3,000$ $2$ $800$ $3,000$ $3$ $3,000$ $800$ $4$ $5,000$ $200$ At what cost of capital will the net present value of the two projects be the same? $($That is$,$ what is the "crossover" rate?$)$ Round it to one decimal place, e$.$g$.,\text{}10\mathrm{.}5.$

$16.$ Shannon Industries is considering a project which has the following cash flows:

Year

Cash Flow

$0$

$?$

$1$

$$2,000$

$2$

$3,000$

$3$

$3,000$

$4$

$1,500$

The project has a payback of $2\mathrm{.}5$ years. The firm's cost of capital is $12$ percent. What is the project's net present value NPV$?$ Round it to a whole dollar, e$.$g$.,\text{}1234.$

$17.$ McCarver Inc. is considering the following mutually exclusive projects:

Project A

Project B

Year

Cash Flow

Cash Flow

$0$

$-$$$5,000$

$-$$$5,000$

$1$

$200$

$3,000$

$2$

$800$

$3,000$

$3$

$3,000$

$800$

$4$

$5,000$

$200$

At what cost of capital will the net present value of the two projects be the same? $($That is$,$ what is the "crossover" rate?$)$ Round it to one decimal place, e$.$g$.,\text{}10\mathrm{.}5.$

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