Consider the following cash flows for projects A and B.

Year Project A Project B

0 -$1000 -$1000

1 375 900

2 375 700

3 375 500

4 375 -200

5 -100 200

The cost of capital for both projects is 10%. What is the cross over rate for projects A and B (the rate at which NPV profiles of the projcets intersect each other)?

	1.	There are multiple cross over rates for projects A and B for rates between 0% and 100%.
	2.	15.61%
	3.	There is no cross over rate as the NPV profiles of projects A and B do not cross each other for any rate between 0% and 100%.
	4.	10%