Danny Inc. is considering two projects that have the following cash flows:
Project 1 Project 2
able[[Year, Cash Flow],[0, -$2,000],[-$1,900, 1],[500, 1,100],[700, 900],[800, 800],[1,000, 600],[1,100, 400]]
At what cost of capital would the two projects have the same net present value?
a. 4.73%
b. 5.85%
c. 6.70%
d. 7.50%
e. 8.20%
KMG is considering two mutually exclusive projects that have the following cash flows:
Project A Project B
able[[Year, Cash Flow],[0, -$10,000],[-$8,000, 1],[1,000, 7,000],[2,000, 1,000],[6,000, 1,000],[6,000, 1,000]]
At what cost of capital do the two projects have the same net present value? (That is, what is the crossover rate?)
a. 11.20%
b. 12.26%
c. 12.54%
d. 13.03%
e. 14.15%