Question: You are comparing two projects with the following cash flows: Project A Project B Time Cash Flow A Cash Flow B 0 (6,000) (6,000) 1
You are comparing two projects with the following cash flows:
| Project A | Project B | |
| Time | Cash Flow A | Cash Flow B |
| 0 | (6,000) | (6,000) |
| 1 | 700 | 1,725 |
| 2 | 850 | 1,575 |
| 3 | 1,000 | 1,425 |
| 4 | 1,150 | 1,275 |
| 5 | 1,300 | 1,125 |
| 6 | 1,450 | 975 |
| 7 | 1,600 | 825 |
| 8 | 1,750 | 675 |
| 9 | 1,900 | 525 |
| 10 | 2,050 | 375 |
a. Calculate the NPV & IRR for each project.
b. At a discount rate of 10%, which project would you accept?
c. At a discount rate of 15%, which project would you accept?
d. Create a graph that shows the NPV profiles of both projects (put both profiles on a single graph). Label your axes and give the graph a title.
e. Calculate the crossover rate for the projects.
f. What is the crossover rate? Why to NPV and IRR rank the projects differently at different discount rates?
This needs to be completed in excel with formula text for the cells. As confirmation I have done this correctly. Thank you,
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