Question: 1.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

1.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?)

a. 15.68%

b. 16.15%

c. 16.25%

d. 17.72%

e. 17.80%

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