Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Transcribed Image Text:Problem 3
In comparing three alternatives by the incremental rate of return method, an engineer
is provided the following information:
Alternative 1
(least costly)
IRR → 9.1
7.7
Alternative 2
7.2
AIRR
8.8
10.1
Alternative 3
(most costly)
(a) If the MARR is 7%, which alternative should be chosen?
(b) If the MARR is 8%, which alternative should be chosen?
(c) If the MARR is 9%, which alternative should be chosen?
(d) If the MARR is 10%, which alternative should be chosen?
8.3
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