# The questions for the assignment are in blue. I’ve believe I’ve answered

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The questions for the assignment are in blue. I’ve believe I’ve answered a and b, but… 1 answer below » The questions for the assignment are in blue. I’ve believe I’ve answered a and b, but I’m having trouble with c. Which I believe is needing a crossover rate? I’m not sure where to go with this. Please help. Thank you. I’ve attached my work. Document Preview: Year

Cash Flow (A)
Cash Flow (B)
=IRR(B2:B6)
(A) IRR=
20%
0
-43000
-43000
=IRR(C2:C6)
(B) IRR=
19%
1
23000
7000
2
17900
13800
Discount Rate=
11%
3
12400
24000
=NPV(F4,B3:B6)+B2
(A)NPV=
\$7,507.61
4
9400
26000
=NPV(F4,C3:C6) + C2
(B) View complete question » The questions for the assignment are in blue. I’ve believe I’ve answered a and b, but I’m having trouble with c. Which I believe is needing a crossover rate? I’m not sure where to go with this. Please help. Thank you. I’ve attached my work. Document Preview: Year
Cash Flow (A)
Cash Flow (B)
=IRR(B2:B6)
(A) IRR=
20%
0
-43000
-43000
=IRR(C2:C6)
(B) IRR=
19%
1
23000
7000
2
17900
13800
Discount Rate=
11%
3
12400
24000
=NPV(F4,B3:B6)+B2
(A)NPV=
\$7,507.61
4
9400
26000
=NPV(F4,C3:C6) + C2
(B)NPV=
\$9,182.29
12a) Based on the IRR of both projects A (20%) and B (19%), the company should choose project A. This decision is not necessarily correct because the IRR can’t be used to rank mutually exclusive projects because the project with the highest IRR is not necessarily the preferred investment.
12b) Based on the NPV of both projects A (\$7507.61) and B (\$9182.29) the company should choose project B if it chooses to apply the NPV decision rule.
12c)
What is the IRR for each of these projects? Using the IRR decision rule, which project should the company accept? Is this decision necessarily correct?
If the required return is 11 percent, what is the NPV for each of these projects? Which project will the company choose if it applies the NPV decision rule?
Over what range of discount rates would the company choose project A? Project B? At what discount rate would the company be indifferent between these two projects? Explain. Attachments: Q.-Attachment….docx View less » Sep 18 2015 05:03 PM

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