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1. You are comparing two mutually-exclusive projects with the following cash flows.
Year
Project Cody
Project Dogwood
0
-$11,000
-$11,000
1
$4,000
$1,000
2
$2,000
$1,000
3
$3,000
$2,000
4
$1,000
$2,000
5
$5,000
$2,000
6
$6,000
$2,000
7
$1,000
$3,000
8
$1,000
$6,000
9
$1,000
$6,000
10
$1,000
$6,000
a. Calculate the NPV at 6% discount rate and the IRR for each project.
b. At a discount rate of 6%, which project would you choose and explain why?
c. Calculate the NPV at 13% discount rate for each project.
d. At a discount rate of 13%, which project would you choose and explain why?
e. Calculate the crossover rate for the projects by using differential cash flows and IRR.
f. Create a Data Table that shows the NPV of both projects over a range of discount rates
from 0% - 20% (in 2% increments).
