You are analysing the following investment projects. Both projects have a 10% discount rate. The proposed Project
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Question:
You are analysing the following investment projects. Both projects have a 10% discount rate.
The proposed Project A will cost $500,000. Cash inflows are projected to be: year 1 = $50,000, year 2 = $120,000; year 3 = $90,000; year 4 = $180,000; year 5 = $110,000.
The other proposed Project B will cost $400,000.Cash inflows are projected to be: year 1 = $60,000, year 2 = $70,000; year 3 = $80,000; year 4 = $90,000; year 5 = $100,000.
REQUIRED:
(i) Calculate the crossover rate.
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