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a George is interested in buying one of the two local businesses on sale: a Coffee Shop or a Shoe Store. The cashflows of both the businesses are shown below. George can borrow from a bank at a rate of 8.00% to buy Coffee Shop and 6.00% to buy Shoe Store Coffee Shop Shoe Store Year -$115,000 -$115,000 0 (Purchase Price) $7,188 $51,750 1 $21,5621 $38,812 2 $40,2501 $28,750 3 $50,315 $21,563 $57,500 $14,375 4 5 19) How much is the NPV at the crossover rate? At crossover rate, both projects have the same NPV. Enter your answer in the following format: + or - 1,234; Hint: Answer is between 7,831 and 9,610 A Southern California based firm is forced to choose between Mexico or Canada to build its manufacturing plant. The cash flows of both plants are shown below. The firm can operate its trucks for extra two years if it chooses Mexico, thus giving Mexico project extra two vear life. The firm can borrow from local banks at a rate of 6.00% in Mexico or 5.00% in Canada Mexico Canada Year -$120,000 -$110,000 0 (Purchase Price) $30,000 $40,000 1 $30,000 $40,000 2 $30,000 $40,000 3 $30,000 4 $30,000 20) Should the firm choose Mexico or Canada plant? Hint: Choose the plant with the highest EAA (l.e., higher benefit) a George is interested in buying one of the two local businesses on sale: a Coffee Shop or a Shoe Store. The cashflows of both the businesses are shown below. George can borrow from a bank at a rate of 8.00% to buy Coffee Shop and 6.00% to buy Shoe Store Coffee Shop Shoe Store Year -$115,000 -$115,000 0 (Purchase Price) $7,188 $51,750 1 $21,5621 $38,812 2 $40,2501 $28,750 3 $50,315 $21,563 $57,500 $14,375 4 5 19) How much is the NPV at the crossover rate? At crossover rate, both projects have the same NPV. Enter your answer in the following format: + or - 1,234; Hint: Answer is between 7,831 and 9,610 A Southern California based firm is forced to choose between Mexico or Canada to build its manufacturing plant. The cash flows of both plants are shown below. The firm can operate its trucks for extra two years if it chooses Mexico, thus giving Mexico project extra two vear life. The firm can borrow from local banks at a rate of 6.00% in Mexico or 5.00% in Canada Mexico Canada Year -$120,000 -$110,000 0 (Purchase Price) $30,000 $40,000 1 $30,000 $40,000 2 $30,000 $40,000 3 $30,000 4 $30,000 20) Should the firm choose Mexico or Canada plant? Hint: Choose the plant with the highest EAA (l.e., higher benefit)

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