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What is the “cross-over” rate of the following projects? Year Project A Project B 0 -1,400 -800 1 950 600 2 950 600

Survey of Accounting (Accounting I)

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter15: Capital Investment Analysis

Section: Chapter Questions

Problem 15.3.2P

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What is the “cross-over” rate of the following projects?

Year Project A Project B

0 -1,400 -800

1 950 600

2 950 600

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Emusk Inc. is evaluating two mutually exclusive projects. The required rate of return on these projects is 8%. Calculate the internal rate of return for Project B. (Enter percentages as decimals and round to 4 decimals). Year Project A Project B 0 -15,000,000 -15,000,000 1 2,000,000 6,000,000 2 3,000,000 6,000,000 3 5,000,000 6,000,000 4 5,000,000 1,000,000 5 6,000,000 1,000,000
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