Question: Central Energy is considering two mutually exclusive projects, Project Red and Project The projects have the following cash flows: Year Project Red Cash Flows Project

Central Energy is considering two mutually exclusive projects, Project Red and  Project The projects have the following cash flows:

 

Year

Project Red

 Cash Flows

Project White

 Cash Flows

0

-$1,000

-$1,000

1

100

700

2

200

400

3

600

200

4

800

100

 

Assume that both projects have a 10 percent WACC.

 

At what weighted average cost of capital would the two projects have the same net present value?

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