Explore BrainMass

Explore BrainMass

    Capital Budgeting

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Suppose Projects A and B have the Co and C1 after tax net cash flows shown below.

    The Net Present Value Profiles for Project's A and B will cross over one another at what approximate discount rate?

    Project Co C1
    A -500 +700
    B -1000 +1300

    A) 0 %
    B) 10%
    C) 16.67%
    D) 20%
    E) 21.37%
    F) No crossover rate exists. The profiles never intersect.
    G) The crossover cannot be determined from the information provided

    © BrainMass Inc. brainmass.com June 3, 2020, 11:25 pm ad1c9bdddf

    Solution Preview

    Please refer attached file for better understanding of formula.



    Solution Summary

    Solution describes the steps to calculate cross over rate.