Problem 8-18 Crossover Point [LO 3] Crenshaw Enterprises has gathered projected cash flows for two projects. Year Project I Project J 0 −$ 267,000 −$ 267,000 1 113,300 95,200 2 106,400 100,700 3 90,400 102,700 4 79,400 109,700 At what interest rate would the company be indifferent between the two projects? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Which project is better if the required return is above this interest rate?
Problem 8-18 Crossover Point [LO 3] Crenshaw Enterprises has gathered projected cash flows for two projects. Year Project I Project J 0 −$ 267,000 −$ 267,000 1 113,300 95,200 2 106,400 100,700 3 90,400 102,700 4 79,400 109,700 At what interest rate would the company be indifferent between the two projects? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Which project is better if the required return is above this interest rate?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Problem 8-18 Crossover Point [LO 3]
Crenshaw Enterprises has gathered projected cash flows for two projects.
| Year | Project I | Project J |
|---|---|---|
| 0 | −$ 267,000 | −$ 267,000 |
| 1 | 113,300 | 95,200 |
| 2 | 106,400 | 100,700 |
| 3 | 90,400 | 102,700 |
| 4 | 79,400 | 109,700 |
-
At what interest rate would the company be indifferent between the two projects?
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
-
Which project is better if the required return is above this interest rate?
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