Question

You are considering the following two mutually exclusive projects. The crossover rate between these two projects is ___ percent and Project ___ should be accepted if the required return is greater than the crossover rate.

Year	Project A			Project B
0		−$21,000			−$21,000
1		7,000			15,040
2		7,000			5,000
3		15,000			7,060

• 16.70%; A

• 12.59%; B

• 12.59%; A

• 15.61%; B

• 15.61%; A

Answer 1