Consider the five investment alternatives described below. Which alternatives can be eliminated from an incremental ROR analysis by applying short cuts for an investor with a MARR of 10%? Each alternative has a 5-year life and no salvage value. Initial cost Alternative ROR (%) (Sk) A. 60 14 45 20 50 18 30 25 75 12 Can eliminate do-nothing and C Can eliminate do-nothing and A Can eliminate do-nothing and E Can eliminate do-nothing only
Consider the five investment alternatives described below. Which alternatives can be eliminated from an incremental ROR analysis by applying short cuts for an investor with a MARR of 10%? Each alternative has a 5-year life and no salvage value. Initial cost Alternative ROR (%) (Sk) A. 60 14 45 20 50 18 30 25 75 12 Can eliminate do-nothing and C Can eliminate do-nothing and A Can eliminate do-nothing and E Can eliminate do-nothing only
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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
Transcribed Image Text:Consider the five investment alternatives described below. Which alternatives can be eliminated from an incremental
ROR analysis by applying short cuts for an investor with a MARR of 10%? Each alternative has a 5-year life and no
salvage value.
Initial cost
Alternative
ROR (%)
(Sk)
60
14
45
20
50
18
D
30
25
75
12
Can eliminate do-nothing and C
Can eliminate do-nothing and A
Can eliminate do-nothing and E
Can eliminate do-nothing only

Transcribed Image Text:Consider the following net cash flow:
EOY
NCF (S)
- 120
40
40
3.
40
4
80
Although there are several possible NPW equations (or EUAB - EUAC equations), use the following NPW equation to
answer this question:
NPW = - 120 + 40 (P/A,i%,3) + 80 (P/F,1%,4)
of this net cash flow,
Use linear interpolation between adjacent interest rates in
or Excel functions.
terest
ples to estimate
Which of the selections below is correct?
ROR = 32.0%
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