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Crenshaw Enterprises has gathered projected cash flows for two projects. Year 0 1 2 3 4 Project I Project J -$ 266,000 -$ 266,000 113,400 94,600 106,200 100,600 90,200 102,600 79,200 109,600 a. 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. b. Which project is better if the required return is above this interest rate? a. Interest rate b. %

Crenshaw Enterprises has gathered projected cash flows for two projects. Year 0 1 2 3 4 Project I Project J -$ 266,000 -$ 266,000 113,400 94,600 106,200 100,600 90,200 102,600 79,200 109,600 a. 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. b. Which project is better if the required return is above this interest rate? a. Interest rate b. %

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Crenshaw Enterprises has gathered projected cash flows for two projects. Year 0 1 2 3 4 Project I Project J -$ 266,000 -$ 266,000 113,400 94,600 106,200 100,600 90,200 102,600 79,200 109,600 a. 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. b. Which project is better if the required return is above this interest rate? a. Interest rate b. %
Transcribed Image Text:Crenshaw Enterprises has gathered projected cash flows for two projects. Year 0 1 2 3 4 Project I Project J -$ 266,000 -$ 266,000 113,400 94,600 106,200 100,600 90,200 102,600 79,200 109,600 a. 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. b. Which project is better if the required return is above this interest rate? a. Interest rate b. %
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