Question: Projects A and B are mutually exclusive and both have an initial cost of $3,000. Annual Cash flows are following the table. What is the

  1. Projects A and B are mutually exclusive and both have an initial cost of $3,000. Annual Cash flows are following the table. What is the crossover rate (i.e. At what discount rate would the company be indifferent between these two projects)?

    CFs CFs
    Year Project A Project B
    0 -3,000 -3,000
    1 500 2,000
    2 500 1,000
    3 1,500 600
    4 2,000 500
    A.

    6.33 percent
    B.

    14.25 percent
    C.

    18.82 percent
    D.

    7.99 percent
    E.

    9.17 percent

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