Suppose there are 2 projects under consideration. Cash flows of project A, B and B - A are as follows:
Period |
0 |
1 |
2 |
3 |
Project A |
−10 500 |
10 000 |
1000 |
1000 |
Project B |
−10 500 |
1000 |
1000 |
12 000 |
Cash flows of B - A |
0 |
− 9000 |
0 |
11 000 |
Based upon the information the table above we can calculate the NPV of Project A and Project B under different discount rates. The results are presented in table C1.
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© 2006 Springer Science+Business Media, Inc.
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Lee, CF., Lee, A.C. (2006). Derivation of crossover rate. In: Lee, CF., Lee, A.C. (eds) Encyclopedia of Finance. Springer, Boston, MA. https://doi.org/10.1007/978-0-387-26336-6_79
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DOI: https://doi.org/10.1007/978-0-387-26336-6_79
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