Problem 7A firm is considering the following three alternatives, as well as a fourth choice: donothing. Each alternative has a 7-year useful life. The firm's minimum attractive rate ofreturn is 9½ %.AAlternativeInitial cost$100,000Uniform annual net income24,036Computed rate of return15.00%B$130,00030,19813.87%с$330,00069,93610.96%Using incremental rate of return comparisons, determine which alternative should beselected.

We have given four alternatives, do nothing alternative, and A,B and C alternatives. The MARR is…

A firm is considering the following three alternatives, as well as a fourth choice: do nothing. Each alternative has a 7-year useful life. The firm's minimum attractive rate of return is 9½ %. Alternative A B $100,000 $130,000 24.036 30.198 15.00% 13.87% Initial cost Uniform annual net income Computed rate of return с $330,000 69.936 10.96% Using incremental rate of return comparisons, determine which alternative should be selected.

A firm is considering the following three alternatives, as well as a fourth choice: do nothing. Each alternative has a 7-year useful life. The firm's minimum attractive rate of return is 9½ %. Alternative A B $100,000 $130,000 24.036 30.198 15.00% 13.87% Initial cost Uniform annual net income Computed rate of return с $330,000 69.936 10.96% Using incremental rate of return comparisons, determine which alternative should be selected.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Problem 7
A firm is considering the following three alternatives, as well as a fourth choice: do
nothing. Each alternative has a 7-year useful life. The firm's minimum attractive rate of
return is 9½ %.
A
Alternative
Initial cost
$100,000
Uniform annual net income
24,036
Computed rate of return
15.00%
B
$130,000
30,198
13.87%
с
$330,000
69,936
10.96%
Using incremental rate of return comparisons, determine which alternative should be
selected.

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