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. (Round your answers to 2 decimal places. (e.g., 32.16)).

IRR

Project X %

Project Y %

What is the crossover rate for these two projects? (Round your answer to 2 decimal places. (e.g., 32.16)). Crossover rate %

What is the NPV of Projects X and Y at discount rates of 0%, 15%, and 25%? (Negative amount should be indicated by a minus sign. Round your answers to 2 decimal places. (e.g., 32.16))

YEAR CASH FLOW X CASH FLOW Y 0 $ -19400.00 $ -19400.00 1 8700.00 9800.00 2 8800.00 7650.00 3 8650.00 8550.00

Explanation / Answer

IRR Project X = 15% +1.75 i.e 16.75%

IRR Project Y = 15% + 1.88 i.e 16.88%

Particulars Year PVF @ 0% PVF @ 15% PVF @ 25% Cash Flows Project X PV @ 0% PV @ 15% PV @ 25% Cash Flows 0 1 1 1 -19400 -19400 -19400 -19400 Cash Flows 1 1               0.87 0.8 8700      8,700.00    7,565.22     6,960.00 Cash Flows 2 1               0.76 0.64 8800      8,800.00    6,654.06     5,632.00 Cash Flows 3 1               0.66 0.512 8650      8,650.00    5,687.52     4,428.80 NPV      6,750.00       506.80 (2,379.20)

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