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
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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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
  1. 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.

  2. Which project is better if the required return is above this interest rate?

 

 

 

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