An investor with a MARR of 15% and at least $40k to invest is using rate of return analysis to determine which, if either, of two mutually exclusive investment alternatives (X and Y) should be selected. Perform the analysis and make a recommendation. Alternative Initial cost (Sk) ROR (%) Life (years) Assume that the ROR of the incremental NCF (X - Y) is 10%. X Y 40 30 22 26 Choose do-nothing Choose Y because the ROR of Y is greater than the ROR of X Choose Y because the incremental ROR < MARR OChoose X because the incremental ROR >0

An investor with a MARR of 15% and at least $40k to invest is using rate of return analysis to determine which, if either, of two mutually exclusive investment alternatives (X and Y) should be selected. Perform the analysis and make a recommendation. Alternative Initial cost (Sk) ROR (%) Life (years) Assume that the ROR of the incremental NCF (X - Y) is 10%. X Y 40 30 22 26 Choose do-nothing Choose Y because the ROR of Y is greater than the ROR of X Choose Y because the incremental ROR < MARR OChoose X because the incremental ROR >0

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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