Question: The following information is for two mutually exclusive projects, project Nuts & project Bolts: Project Year 0 Year 1 Year 2 Year 3. Year 4.

The following information is for two mutually exclusive projects, project Nuts & project Bolts:

Project Year 0 Year 1 Year 2 Year 3. Year 4. Year 5 Nuts -$300 $175 $125 $0 $0. $0 Colts -$200 $100 $100 $100. $100. $100

Calculate the discount rate (crossover rate) where the two projects have the same NPV?

Can we use IRR rule to decide between mutually exclusive projects? Why? Which project should be chosen?

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