I have no idea how to calculate a crossover rate.

Project S:
NPV @ 0% = $300
IRR = 14.5%

Project L:
NPV @ 0% = $400
IRR = 11.8%

I also have the initial investment #'s and the return in each period but it seems like thats not needed, if so let me know.

The Crossover rate is 7.2% but it doesn't say how they got that number, someone please help!

11/15/2006 10:50:42 PM

oh fucking great...i'm gonna take that class next semester

11/15/2006 10:52:47 PM

what chapter is that from? i have davis for 320 and he's never covered that (though we're just now through ch 12)

11/15/2006 10:55:20 PM

It's from Ch.11, I have Prof. Sloan

11/15/2006 11:01:35 PM

ack, cant help you then, we've already done ch 11 and we didnt cover crossover rates

[Edited on November 15, 2006 at 11:04 PM. Reason : and i dont own the book ]

11/15/2006 11:04:28 PM

i don't think sloan ever showed how to calculate it that day in class he just showed a graph about it...i wouldn't expect a question on it but idk how to calculate it either...sorry

11/16/2006 12:07:09 AM

on a scale of 1-10 what would yall rank the class in difficulty?

i asked the business 370 peeps and they said just study and go to class and u should do ok

11/16/2006 12:31:58 AM

My grade reflects a 9, but its prob not really that hard as long as you follow along and do the work, its a lot to remember and I mix things up bad. It seems like I understand the concept then it gets warped weird on the test and I get confused. So just pay attention and do the work and you should be fine.

11/16/2006 12:37:09 AM

How do you determine weather or not the projects should be accepted, given X and Y are independent projects? Its #6 on the practice test for Sloan, based off either the NPV,IRR or MIRR, it doesnt say which to use.

11/16/2006 12:39:35 AM

for the crossover rate you subtract project L year 0 from project S year 0, that year one and two and three and so on. So that should be, 0,400,100,-100, and -500. Than inter it in your calculater as a CF and than get the irr and that equals 7.2

11/16/2006 1:05:54 AM

win in doubt use the NPV

11/16/2006 1:06:29 AM

Quote :

"How do you determine weather or not the projects should be accepted, given X and Y are independent projects? Its #6 on the practice test for Sloan, based off either the NPV,IRR or MIRR, it doesnt say which to use."

if NPV > 0 then accept, if it's negative then reject

or

if IRR > cost of capital accept, if < cost of capital reject

11/16/2006 1:15:50 AM

thanks guys, i appreciate the help, I think that does it for me.

11/16/2006 1:38:34 AM

hah, I remember Sloan glossing over this too when I was in it and I got that Q wrong on the test (there was just like 1)

basically just pay attention to every word he says, and you'll have all the direction you need to study for tests. His final will murder you, just a warning, so don't rely on an awesome final to bring stuff up.

Still, this course is tied w/ 370 for bet 300-level BUS course at State (if you have Sloan, that is)

11/16/2006 7:25:22 AM

Quote :

"Still, this course is tied w/ 370 for bet 300-level BUS course at State (if you have Sloan, that is) "

agreed

11/16/2006 3:48:17 PM