FIN 534 Week 8 Homework Assignment Use the following information for Questions 1 through 3: Assume you are presented with the following mutually exclusive investments whose expected net cash flows are as follows: EXPECTED NET CASH FLOWS: Year Project A Project B 0 âˆ’$400 âˆ’$650 1 âˆ’528 210 2 âˆ’219 210 3 âˆ’150 210 4 1,100 210 5 820 210 6 990 210 7 âˆ’325 210 1. (a) What is each projectâ€™s IRR? (b) If each projectâ€™s cost of capital were 10%, which project, if either, should be selected? If the cost of capital were 17%, what would be the proper choice? 2. (a) What is each projectâ€™s MIRR at the cost of capital of 10%? At 17%? (Hint: Consider Period 7 as the end of Project Bâ€™s life.) 3. What is the crossover rate, and what is its significance?
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