1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
jarptica [38.1K]
3 years ago
5

Suppose you are evaluating two mutually exclusive projects, A and B. Project A costs $350 and has cash flows of $250 and $250 in

the next 2 years, respectively. B costs $300 and generates cash flows of $300 and $100. What is the crossover rate for these projects
Business
1 answer:
ki77a [65]3 years ago
5 0

Answer:

The answer is 30%

Explanation:

Solution

Given that:

Project A

Project A costs = $350

Cash flows =$250 and $250 (next 2 years)

Project B

Project B costs =$300

Cash flow = $300 and  $100

Now what is the crossover rate for these projects.

Thus

Year Project A    Project B A-B        B-A

0            -350     -300        -50        50

1             250      300        -50        50

2             250      100         150       -150

IRR         27%      26%         30%      30%

So,

CF = CF1/(1+r)^1 + CF2/(1+r)^2

$-50 = $-50/(1+r)^1 + $150/(1+r)^2

r = 30%

CF = CF1/(1+r)^1 + CF2/(1+r)^2

$50 = $50/(1+r)^1 + $-150/(1+r)^2

r = 30%

Hence, the cross over rate for these project is 30%

Note:

IRR =Internal rate of return

CF =Cash flow

r = rate

You might be interested in
A Japanese company has a bond outstanding that sells for 87 percent of its ¥100,000 par value. The bond has a coupon rate of 4.3
PSYCHO15rus [73]

Answer:

YTM = 12.66%

Explanation:

FV = ¥100,000

PV = 0.87 x  ¥100,000

PV=  ¥87,000

Coupon payment = 4.3% x ¥100,000

Coupon payment = ¥4300 per year

N = 18 years

YTM = ?

We would simply plug these values into a financial calculator

https://www.calculator.net/finance-calculator.html?ctype=returnrate&ctargetamountv=1000000&cyearsv=18&cstartingprinciplev=87000&cinterestratev=6&ccontributeamountv=4300&ciadditionat1=end&printit=0&x=0&y=0

YTM = 12.66%

8 0
3 years ago
What if this website was a dating and show yourself and butt app/website?
marta [7]
It’s not but that would be weird considering a lot of people on here are minors
5 0
3 years ago
Beneficiary is one who unintentionally gains a benefit from a contract between other parties
son4ous [18]
The answer is "incidental beneficiary".

An incidental beneficiary refers to somebody who indirectly acquires an advantage as the aftereffect of the fundamental reason for the trust. An incidental beneficiary is a recipient who isn't a planned recipient. For instance, a grandchild may profit by his/her parent accepting a blessing which could be utilized by the whole family, or which he/she may acquire from the parent. 
6 0
3 years ago
At a volume of 5,000 units, Pwerson Company incurred $32,000 in factory overhead costs, including $14,000 in fixed costs. If vol
shusha [124]

Answer:

If volume increases to 6,000 units and both 5,000 units and 6,000 units are within the relevant range, the company would expect to incur total factory overhead costs of $35,600

Explanation:

At a volume of 5,000 units, Pwerson Company incurred $32,000 in factory overhead costs, including $14,000 in fixed costs.

The variable in factory overhead costs = $32,000 - $14,000 = $18,000

The variable in factory overhead costs per unit = $18,000/5,000 = $3.6

Both 5,000 units and 6,000 units are within the relevant range. Therefore, when volume increases to 6,000 units, fixed costs are not change.

The variable in factory overhead costs = $3.6 x 6,000 = $21,600

Total factory overhead costs = $21,600 + $14,000 = $35,600

4 0
3 years ago
The number of accidents that occur annually on a busy stretch of highway is an example of:
andrew11 [14]
I believe the answer to this question is "<span>A discrete random variable". </span>
8 0
3 years ago
Other questions:
  • Vandalay Industries manufactures two products: toasters and blenders. The annual production and sales of toasters is 2100 units,
    5·1 answer
  • Joe's income is $300. He can buy 2 goods – Food and Shelter. a. (5 points) Write the budget constraint and draw the budget line
    8·1 answer
  • After years of using a mass marketing strategy, Digital Print Shops has responded to new competition from national chain stores
    13·2 answers
  • Government transfer payments:A) are included as part of government purchases, G.B) can be viewed as negative tax payments, T.C)
    11·1 answer
  • Write a short essay listing three jobs you believe would be right and good for you.
    13·1 answer
  • Limitations of the _____ budgeting method include not allowing firms to exploit the unique opportunities or problems they confro
    7·1 answer
  • In practice, a common way to value a share of stock when a company pays dividends is to value the dividends over the next five y
    6·2 answers
  • Common stock holders: Group of answer choices have one vote in the election of how the company operates. are last in line to rec
    15·1 answer
  • True or false: revenue is recorded when services are performed, whereas deferred revenue is recorded when cash is received from
    14·1 answer
  • jerusalem medical ltd., an israeli producer of portable kidney dialysis units and other medical products, develops a 4-month agg
    14·2 answers
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!