Woodson Inc

question 75

Multiple Choice

Woodson Inc.has two possible projects,Project A and Project B with the following cash flows: Year
Project A
Project B
0
−150,000
−100,000
1
100,000
45,000
2
105,000
65,000
3
40,000
80,000
At what required rate of return do the two projects have the same net present value (NPV) ?
(In other words,what is the "crossover rate" of the projects' NPV profiles?
)

• A) 10.3%
• B) 13.5%
• C) 15.8%
• D) 21.7%
• E) 34.8%

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