Author Question: Anderson Associates is considering two mutually exclusive projects that have the following cash ... (Read 10 times)

moore.cailinf · **on:** Aug 7, 2023

Question 1

Adler Enterprises is considering a project that has the following cash flow and WACC data. What is the project’s NPV?

WACC:	11%
Year:	0	1	2	3
Cash flows:	–$1,000	$480	$490	$500

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$182.37

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$195.72

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$199.50

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$204.82

Question 2

Anderson Associates is considering two mutually exclusive projects that have the following cash flows:

	Project A	Project B
Year	Cash Flow	Cash Flow
0	–$12,000	–$9,000
1	2,000	8,000
2	3,000	1,000
3	7,000	2,000
4	9,000	3,000

At what cost of capital do the two projects have the same NPV? (That is, what is the crossover rate?)

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15.07%

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15.86%

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16.03%

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16.95%

lola.jashay · **Reply #1 on:** Aug 7, 2023

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