Suppose Canadian Space Flight Group has two mutually exclusive projects: space flight using an Airbus and space flight using a Bombardier aircraft.
Project Airbus requires an initial cash outlay of $325,000 and is expected to provide after-tax cash flows of $60,000 in year 1, $80,000 in year 2, $150,000 in year 3, and $180,000 in year 4.
Project Bombardier requires an initial cash outlay of $250,000 and is expected to provide after-tax cash flows of $70,000 in year 1, $100,000 in year 2, $120,000 in year 3, and $70,000 in year 4.
The appropriate discount rate is 12%.
a)Find the IRRs of both projects.
b)Find the crossover rate of the two projects.
c)Which project should be accepted using the information in (B)? Why?

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The Answer of Suppose Canadian Space Flight Group has two mutually exclusive projects: space flight using an Airbus and space flight using a Bombardier aircraft.
Project Airbus requires an initial cash outlay of $325,000 and is expected to provide after-tax cash flows of $60,000 in year 1, $80,000 in year 2, $150,000 in year 3, and $180,000 in year 4.
Project Bombardier requires an initial cash outlay of $250,000 and is expected to provide after-tax cash flows of $70,000 in year 1, $100,000 in year 2, $120,000 in year 3, and $70,000 in year 4.
The appropriate discount rate is 12%.
a)Find the IRRs of both projects.
b)Find the crossover rate of the two projects.
c)Which project should be accepted using the information in (B)? Why?

Suppose Canadian Space Flight Group Has Two Mutually Exclusive Projects