Any help would be appreciated, thank you! Polytec Chemical, Inc. must decide between two additives to improve the dry-weather stability of its low-cost acrylic paint. Additive A will have an equipment and installation cost of $110,000 and an annual cost of $55,000. Additive B will have an installation cost of $175,000 and an annual cost of $30,000. If the company uses a five-year recovery period for paint products and an MARR of 27% per year, which process is favored on the basis of an incremental rate of return analysis? Also, determine the value of Δi*.The value of Δi* is [blank]%.On the basis of an incremental rate of return analysis, process [Click to select] is favored.

IRR (Incremental rate of return) calculates the returns from an investment by considering only the factors that are internal to the investment like the installation charges, equipment changes, and others. It doesn't consider external factors like inflation, financial risk, and others to calculate returns. MARR is the minimum return that the investment must earn in order to cover the cost. The investor will not make an investment below MARR as it is the lowest rate that is expected from the investment.Given - For Additive A, The initial cost (equipment and installation) =$110,000 Annual cost =$55000 For Additive B - The initial cost (equipment and installation) =$175,000 Annual cost =$30000 PVAF = 1-(1+r)-nr Total Annual cost for Additive A = $55000 PVAF(27%,5years)= 55000 × 1-(1+0.27)-50.27= 55000 × 2.5826=142046.9974Total cost =$110000 + 142046.9974=$252046.9974 Total Annual cost for Additive B = $30000 PVAF(27%,5years)= 30000 × 1-(1+0.27)-50.27= 30000 × 2.5826=77480.1804Total cost =$175000 + 77480.1804=$252480.1804 The IRR (incremental rate of return) is calculated using Excel. The excel steps are - Insert the 5-year data for both Additives - A and B. Find incremental CF by subtracting column C from Column B (That is, B-C). use the formula for IRR, that is=IRR(range,value). The IRR will be displayed as shown below. Thus, the value of IRR is 27%. ∆i* = 0% (As MARR =IRR) As the IRR equals MARR, the benefits from the investment are equal to the cost of the investment. As, the total annual cost is lesser in the case of Additive B with a high initial cost, it is favored as it will reap more benefits/returns at the same rate.Thus, the IRR is calculated as 27% and∆i* = 0 . On the basis of IRR, Additive B is favored over Additive A.