This crossover rate template will demonstrate how to calculate the NPV of different projects and plot the NPV profiles to identify the crossover rate.
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Crossover Rate is the rate of return (alternatively called the weighted average cost of capital) at which the Net Present Value (NPV) of two projects are equal. It represents the rate of return at which the net present value profile of one project intersects the net present value profile of another project.
In capital budgeting analysis exercises, the crossover rate is used to show when one investment project becomes superior to another as a result of a change in the rate of return (cost of capital).
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