Hello, question:

You are analyzing two mutually exclusive projects and have developed the following cash flow projections. What is the crossover rate? (my answer is 1.93%..is this correct?

Year cash Flow A Cash Flow B

0 -26,500 -42,900

1 25,000 31,000

2 28,750 33,200

3 32,800 39,400

Solution:

Difference of -26,500 & -42,900 = 16,400

31,000 - 25,000 = 6,000

33,200-28750 = 4,450

39,400-32,800 = 6,600