Question: Anderson Associates is considering two mutually exclusive projects that have the following cash flows: Project A Project B Year Cash Flow Cash Flow 0 -$11,000

Anderson Associates is considering two mutually exclusive projects that have the following cash flows:

Project A Project B

Year Cash Flow Cash Flow

0 -$11,000 -$9,000

1 2,500 6,000

2 3,000 4,000

3 5,000 3,000

4 9,000 2,000

At what cost of capital do the two projects have the same net present value? (That is, what is the crossover rate?)

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