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Crenshaw Enterprises has gathered projected cash flows for two projects. Year Project I -$ 254,000 Project J -$ 254,000 1 114,600 87,400 2 103,800 99,400 4 87,800 76,800 101,400 108,400 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 Project I -$ 254,000 Project J -$ 254,000 1 114,600 87,400 2 103,800 99,400 4 87,800 76,800 101,400 108,400 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. %

Essentials Of Investments
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
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Crenshaw Enterprises has gathered projected cash flows for two projects. Year Project I -$ 254,000 Project J -$ 254,000 1 114,600 87,400 2 103,800 99,400 4 87,800 76,800 101,400 108,400 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 Project I -$ 254,000 Project J -$ 254,000 1 114,600 87,400 2 103,800 99,400 4 87,800 76,800 101,400 108,400 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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