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Initial Rate of Investment Return ($) Rate of Return on Incrementul Investment (%) When Compured with Alternative Investment Alternative (%) A 35,000 12 20 36 27 B 45,000 15 12 40 22 C 50,000 13 42 25 D 65,000 20 -5 E 80,000 18 28

Initial Rate of Investment Return ($) Rate of Return on Incrementul Investment (%) When Compured with Alternative Investment Alternative (%) A 35,000 12 20 36 27 B 45,000 15 12 40 22 C 50,000 13 42 25 D 65,000 20 -5 E 80,000 18 28

Essentials Of Investments
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
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You are evaluating five investment projects. You have already calculated the rate of return for each alternative investment and incremental rate of return for the two alternatives. In calculating the incremental rate of return, a lower-cost investment project is subtracted from the higher cost investment project. All rate of return figures are rounded to the nearest integers. 

 

If all investment alternatives are mutually exclusive and the MARR is 12%,
which alternative should be chosen?
(a) D
(b)E
(c) B
(d) Do nothing

Initial Rate of Investment Return ($) Rate of Return on Incrementul Investment (%) When Compured with Alternative Investment Alternative (%) A 35,000 12 20 36 27 B 45,000 15 12 40 22 C 50,000 13 42 25 D 65,000 20 -5 E 80,000 18 28
Transcribed Image Text:Initial Rate of Investment Return ($) Rate of Return on Incrementul Investment (%) When Compured with Alternative Investment Alternative (%) A 35,000 12 20 36 27 B 45,000 15 12 40 22 C 50,000 13 42 25 D 65,000 20 -5 E 80,000 18 28
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