Question: Moerdyk & Co. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable.

Moerdyk & Co. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. What is the cross-over rate?

WACC:

6.75%

0

1

2

3

4

CFS

-$2,400

$250

$450

$1050

$1500

CFL

-$1,025

$100

$200

$500

$800

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