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Question 4 Part E: Provide the incremental Rate of Return for the comparison of Location A and Location B. Provide your answer in the

Question 4 Part E: Provide the incremental Rate of Return for the comparison of Location A and Location B. Provide your answer in the

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Miss Piggy is considering a new investment in a boutique store. She has scouted three locations that could suit her needs. Based on the location, her initial cost, annual operations and maintenance, and sales (revenues) would also change. Please help Miss Piggy make a decision on the best location to choose using a ROR analysis. Miss Piggy uses a personal MARR of 11% and a 10 year planning horizon. Location A Location B Location c Initial Cost $250,000 $200,000 $300,000 Annual $3,000 $5,000 $2,000 O&M Costs Annual $47,000 $40,000 $45,000 Revenue Individual 11.86% 11.73% 7.15% ROR Question 4 Part E: Provide the incremental Rate of Return for the comparison of Location A and Location B. Provide your answer in the form: 12.34
Transcribed Image Text:Miss Piggy is considering a new investment in a boutique store. She has scouted three locations that could suit her needs. Based on the location, her initial cost, annual operations and maintenance, and sales (revenues) would also change. Please help Miss Piggy make a decision on the best location to choose using a ROR analysis. Miss Piggy uses a personal MARR of 11% and a 10 year planning horizon. Location A Location B Location c Initial Cost $250,000 $200,000 $300,000 Annual $3,000 $5,000 $2,000 O&M Costs Annual $47,000 $40,000 $45,000 Revenue Individual 11.86% 11.73% 7.15% ROR Question 4 Part E: Provide the incremental Rate of Return for the comparison of Location A and Location B. Provide your answer in the form: 12.34
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