Question: ZZZ Best (ZZZ) is considering two mutually exclusive projects with the annual cash flows shown below. Project A Project B Difference CF 0 -400000 -325000
ZZZ Best (ZZZ) is considering two mutually exclusive projects with the annual cash flows shown below.
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| Project A | Project B | Difference |
| CF 0 | -400000 | -325000 | -75,000 |
| CF 1 | 160000 | 200000 | +40,000 |
| CF 2 | 220000 | 180000 | +40,000 |
| CF 3 | 240000 | 140000 | -100,000 |
| IRR of Project | 23.69% | 29.79% |
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| NPV @ 6% Discount Rate | 148,251.24 | 141,425.30 |
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| NPV @ 14% Discount Rate | 71,626.90 | 83,438.76 |
|
| Crossover Point |
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| 8.7% |
| NPV at Crossover Point |
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What is the NPV of each project at the Crossover Point? _____________
Which project should be chosen if the discount rate is the Point of Indifference? ______
What is the discount rate above which neither project should be accepted? __________
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