Question: Cummings Products is considering two mutually exclusive investments whose expected net cash flows are as follows: EXPECTED NET CASH FLOWS Year Project A Project B
Cummings Products is considering two mutually exclusive investments whose expected net cash flows are as follows:
| EXPECTED NET CASH FLOWS | ||
| Year | Project A | Project B |
| 0 | -$300 | -$405 |
| 1 | -387 | 134 |
| 2 | -193 | 134 |
| 3 | -100 | 134 |
| 4 | 600 | 134 |
| 5 | 600 | 134 |
| 6 | 850 | 134 |
| 7 | -180 | 134 |
a) What is each project's MIRR at a cost of capital of 10%? (Hint: Note that B is a 7-year project.) Round your answers to two decimal places.
b) What is each project's MIRR at a cost of capital of 17%? (Hint: Note that B is a 7-year project.) Round your answer to two decimal places.
c) What is the crossover rate? Round your answer to two decimal places.
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