Crossover rate Calculator
Written by:Abraham A.Finance.ThinkAndDone.com provides you online and windows calculators to calculate crossover rate from two series of cash flows. crossover rate is the interest rate at which two projects have the same net present value. Thus if this rate is higher than the organization's cost of capital, one is likely to accept either of the two projects given that the projects are mutually exclusive. The crossover rate helps an analyst in decision making when two projects have different internal rate of returns and contrasting net present values.
Crossover rate Calculator
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type in the authorization code in the box located below:
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ResultsProject B-A Crossover rate = 20%
NPV of Project A @ Crossover rate= 2.78 NPV of Project B @ Crossover rate= 2.78 |
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Input DataPlease enter an initial guess for crossover rate: %Please enter the net cash flows for Porject A with smaller costs and smaller benefits in the space below: Please enter the net cash flows for Porject B with larger costs and larger benefits in the space below: |
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Instructions
To use this online calculator to calculate crossover rate, you need to type in series of cash flows for each of the 2 projects. Assume one of the projects has the cash flows in amounts of -400 250 280 where -400 represents an expense. And the 2nd project has cash flows of -500 320 340. Follow the steps listed below to find crossover rate with this online calculator
- At first type in the cash flows for the 1st project where each cash flow is separated by a space such as -400 250 280
- Then you type in the cash flows for the 2nd project such as -500 320 340
- Finally clicking on the CALCULATE button will display the crossover rate of 20% and NPV of each project discounted at 20%