Crossover Rate for Aubey Inc
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Aubey Inc. is considering two projects that have the following cash flows:
Project 1 Project 2
Year Cash Flow Cash Flow
0 -$2,000 -$1,900
1 500 1,100
2 700 900
3 800 800
4 1,000 600
5 1,100 400
At what cost of capital would the two projects have the same net present value?
a. 4.73%
b. 5.85%
c. 6.70%
d. 7.50%
e. 8.20%
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Solution Summary
The solution explains how to determine the crossover rate for the given two projects.
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