what is crossover rate?
what is crossover rate?
Crossover rate is the cost of capital at which the net present values of two projects are equal. It is the point at which the net present value profile of one project crosses over (intersects) the net present value profile of the other project is called crossover rate.
Crossover rate is useful in capital budgeting analysis because it informs the investing company about a scenario when a currently-feasible project will no longer be feasible.
