Question: Project A and B are mutually exclusive projects. Both projects have an estimated life of three years. Calculate the cross-over rate between projects A and

Project A and B are mutually exclusive projects. Both projects have an estimated life of three years. Calculate the cross-over rate between projects A and B (discount rate at which the NPV of both projects is same). Now assume a cost of capital percentage for these projects higher than this cross-over rate. Give your decision to accept/reject project/s and justify your answer.

Year Project A Project B

0 -$4,500 -$4,500

1 1,300 2,500

2 1,000 2,000

3 3,500 1,000

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