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FM11 34 - differences for each year(2 entering those...

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3. NPV profiles are curves rather than straight lines . To see this, note that these profiles approach cost = -$100 as r approaches infinity. 4. From the figure below, it appears that the crossover point is between 8 and 9 percent. The precise value is approximately 8.7 percent. One can calculate the crossover rate by (1) going back to the data on the problem, finding the cash flow
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Unformatted text preview: differences for each year, (2) entering those differences into the cash flow register, and (3) pressing the IRR button to get the crossover rate, 8.68% ≈ 8.7%. -10 10 20 30 40 50 60 5 10 15 20 23.6 Discount Rate (%) IRR L = 18.1% IRR S = 23.6% Crossover Point = 8.7% S L r NPV L NPV S 0% $50 $40 5 33 29 10 19 20 15 7 12 20 (4) 5 Mini Case: 11 - 34...
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