Gardial Fisheries is considering two independent investments

Finance Nov 19, 2020

Gardial Fisheries is considering two independent investments. Assume that each project's cost of capital is 10%. The projects' expected net cash flows are as follows:

Expected Net Cash Flows

Time Project A Project B

0 ($950) ($850)

1 $350 $280

2 $450 $350

3 $200 $500

4 $600 $400

5 $800 $750

Calculate the projects' crossover rate and NPV at the cross over rate.

Expert Solution

Crossover rate = 5.64%

NPV is equal for both project ($1,044) at crossover rate.

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