Consider the following two mutually exclusive projects: What is the IRR of Proje
ID: 2742876 • Letter: C
Question
Consider the following two mutually exclusive projects:
What is the IRR of Project X? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)
What is the IRR of Project Y? (Do not round intermediate calculations. Enter your answer as a percentage 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 percentage rounded to 2 decimal places (e.g., 32.16).)
Explanation / Answer
year
Cash flow X
Cash flow Y
Cross over rate
0
(15,300)
(15,300)
-
1
6,770
7,410
640
2
7,350
7,670
320
3
4,870
3,750
(1,120)
IRR
12.28%
12.42%
9.63%
1.(a)IRR of Project X is 12.28 %
(b)IRR of Project Y is 12.42 %
2. Cross over rate = 9.63%
year
Cash flow X
Cash flow Y
Cross over rate
0
(15,300)
(15,300)
-
1
6,770
7,410
640
2
7,350
7,670
320
3
4,870
3,750
(1,120)
IRR
12.28%
12.42%
9.63%