The following six mutually exclusive projects have a life of 10 years. Use the rate of return method (incremental analysis) to determine the preferred project if the MARR is 12%. Project A B C D E F First Cost 3000 4000 7000 9000 10000 13000 N.A.S. 400 1000 1300 1850 2000 2400 Salvage Value 300 500 700 1200 1700 1700 R.O.R. (%) 6.7 21.9 13.9 16.6 16.1 14.0

The following six mutually exclusive projects have a life of 10 years. Use the rate of return method (incremental analysis) to determine the preferred project if the MARR is 12%. Project A B C D E F First Cost 3000 4000 7000 9000 10000 13000 N.A.S. 400 1000 1300 1850 2000 2400 Salvage Value 300 500 700 1200 1700 1700 R.O.R. (%) 6.7 21.9 13.9 16.6 16.1 14.0

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

D2)

EXAMPLE PROBLEM - RATE OF RETURN METHOD, INCREMENTAL ANALYSIS
The following six mutually exclusive projects have a life of 10 years. Use the rate of return
method (incremental analysis) to determine the preferred project if the MARR is 12%.
Project
A
B
C
D
E
F
First Cost
3000
4000
7000
9000
10000
13000
N.A.S.
400
1000
1300
1850
2000
2400
Salvage Value
300
500
700
1200
1700
1700
R.O.R. (%)
6.7
21.9
13.9
16.6
16.1
14.0

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