Crossover Rate Calculator

How it is calculated

The crossover rate is the discount rate r at which the two projects have the same net present value. The tool builds the incremental cash flow series A − B: year 0 is −(cost A − cost B) and each later year is flow A − flow B. It then searches, by repeated halving, for the r that makes Σ CFt ÷ (1 + r)t = 0 between −99.99% and 1,000%. Costs are entered as positive numbers and flows are comma-separated, one per year. If one list is shorter, the missing years count as zero. When the incremental flows never change sign inside that range, no crossover exists and the tool returns nothing; the same happens if both projects are identical (every incremental flow is zero), if a flow is not a number, or if a list is empty. It also shows the incremental NPV at the found rate, which should be 0.

Common mistakes

• Entering the costs with different signs. Only the difference cost A − cost B matters for year 0, so two negative costs give the same answer as two positive ones, but one negative and one positive cost creates a huge year-0 gap that is not what you meant.
• Putting the initial outlay inside the cash-flow list. The list should contain only the yearly inflows for years 1, 2, 3... because the cost has its own field.
• Using a decimal comma or a semicolon in the flow list. Every comma separates two flows, so "100,5,300" is read as three flows (100, 5 and 300), and "100;300" does not parse at all and gives no result.
• Comparing projects of different life without noticing the padding. A shorter list is filled with zeros, which is right only if the shorter project truly earns nothing afterwards.
• Expecting a crossover for any pair of projects. If one project is better in every year (higher flows and no larger cost), the incremental flows never change sign and the tool correctly shows no result; identical projects also show nothing.