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Interest rates Bonus Rate for two years Rate for first year Rate for second year 15,000 8% 6% 10%, Future Value First alternative Second alternative Discount Rate Lease Lease Pavment Present Value of Each Cash Flow Present Value of Lease Cost Buy Purchase Price and Residual Value Present Value of Each Cash Flow 4 $O $O $O Section A Discount rate 12% Year Project A Project EB 500 180 175 160 100 100 500 200 250 170 25 30 4. IRR Section EB Diffe rential Year Project A Project B cash flow 175 160 100 100 250 170 25 30 4. Crossover rate