Question: Consider that Luxio has identified the following two mutually exclusive projects: Cash Flow (A) Year 0.........-34000 Year 1..........16500 Year 2.........14000 Year 3.........10000 Year 4..........6000 Cash

Consider that Luxio has identified the following two mutually exclusive projects:

Cash Flow (A)

Year 0.........-34000

Year 1..........16500

Year 2.........14000

Year 3.........10000

Year 4..........6000

Cash Flow (B)

Year 0........-$34,000

Year 1...........5,000

Year 2.........10,000

Year 3........18,000

Year 4........19,000

The required return is 11%.

Question: Over what range of discount rates would the company choose project A? At what discount rate would the company be indifferent between these two projects? Explain.

P.S. I have calculated the IRR and NPV for 11% required return.

Project A: IRR= 16.60% NPV= $3,491.88

Project B: IRR= 15.72% NPV= $4,298.06

I have also calculated the crossover rate: 13.75%.

I'm having a hard time with the rest. Thank you.

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