Each of the five alternatives has 20-year useful lives. If the MARR is 8%, use incremental rate of return analysis to determine which alternative should be selected? B D 2000 1000 410 117 20% 10% Cost Annual benefit Rate of return A 4000 639 15% C 6000 761 11% E 9000 785 6%

Each of the five alternatives has 20-year useful lives. If the MARR is 8%, use incremental rate of return analysis to determine which alternative should be selected? B D 2000 1000 410 117 20% 10% Cost Annual benefit Rate of return A 4000 639 15% C 6000 761 11% E 9000 785 6%

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

Each of the five alternatives has 20-year useful lives. If the MARR is 8%, use
incremental rate of return analysis to determine which alternative should be selected?
A
B
D
E
4000
2000
1000
9000
639
410
117
785
15%
20%
10%
6%
Cost
Annual benefit
Rate of return
C
6000
761
11%

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Step 1: Introduction:

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Step 2: Rearrange the alternative in increasing order of initial cost:

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Step 3: First incremental cash flow and ROR:

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Step 4: Second incremental cash flow and ROR:

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Step 5: Third incremental cash flow and ROR:

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