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 %
F) No crossover rate exists. The profiles never intersect.
G) The crossover cannot be determined from the information provided
Please refer attached file for better understanding of formula.
Solution describes the steps to calculate cross over rate.