Consider the following two mutually exclusive projects: Calculate the IRR for ea

Question

Consider the following two mutually exclusive projects:

   

    

Calculate the IRR for each project. (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)

   

   

What is the crossover rate for these two projects? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

  

Year      Cash Flow
(X) Cash Flow
(Y) 0 –$ 19, 100 –$ 19,100 1 8, 625 9, 650 2 8, 650 7, 575 3 8, 575 8, 475

Explanation / Answer

IRR of X=16.82% IRR of y= 16.91%

Cross Over rate - Subtract each cash flow from the other including initial outlay, and develop the IRR equation for 3 years , take help of excel and the cross over rate comes at 13.4755%

diascount rate Project x Projecty 0% 6750 6600 15% 503.34 514.38 25% -1818.88 -1754.24

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