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Problem 8-18 Crossover Point [LO 3] Crenshaw Enterprises has gathered projected cash flows for two projects. Year 0 Project I -$ 262,000 Project J -$ 262,000 113,800 92, 200 105,400 100, 200 89,400 102, 200 78,400 109, 200 OHN ma 1 4 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. %

Problem 8-18 Crossover Point [LO 3] Crenshaw Enterprises has gathered projected cash flows for two projects. Year 0 Project I -$ 262,000 Project J -$ 262,000 113,800 92, 200 105,400 100, 200 89,400 102, 200 78,400 109, 200 OHN ma 1 4 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
Problem 1PS
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Crenshaw Enterprise has gathered project cash flows for two projects.

a. At what interest rate would the compapny be indifferent between the two projects? (DO NOT ROUND INTERMEDIATE CALCULATIONS)

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

Please help me solve this question using Excel.

 

Problem 8-18 Crossover Point [LO 3] Crenshaw Enterprises has gathered projected cash flows for two projects. Project I -$ 262,000 113,800 Project J -$ 262,000 92,200 105,400 89,400 78,400 Year 0 @ 72 M 1 3 4 100, 200 102, 200 109, 200 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:Problem 8-18 Crossover Point [LO 3] Crenshaw Enterprises has gathered projected cash flows for two projects. Project I -$ 262,000 113,800 Project J -$ 262,000 92,200 105,400 89,400 78,400 Year 0 @ 72 M 1 3 4 100, 200 102, 200 109, 200 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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