(b) If the incremental IRR you calculated in (a) is lower than the MARR, which alternative is more economical and what is the basis for your decision?O A. Alternative Q because it has an IRR higher than that of Alternative WB. Alternative W because the incremental IRR is lower than the MARROC. Alternative Q because the incremental IRR is lower than the MARRO D.They are economically equivalent because Alternative Q has a higher IRR but based on a lower initial capital investment, while Alternative W has a lowerIRR but based on a higher initial capital investmentO E. Alternative W because it has both a higher initial capital investment and higher annual revenues than alternative Q The following two mutually exclusive investment alternatives are being evaluated using the IRR method. The alternatives have a 5-year service life with nosalvage value.Capital investmentAnnual revenuesIRRO A. 9.0%B. 3.3%O C. 6.4%D. 8.3%AlternativeQ$10,0003,10016.6%(a) Calculate the incremental IRR of investing in Alternative Y rather than Alternative X.AlternativeW$15,0004,30013.3%(b) If the incremental IRR you calculated in (a) is lower than the MARR, which alternative is more economical and what is the basis for your decision?

Given Alternative Q Alternative W Initial investment $10,000 $15,000 Annual revenue 3100…

The following two mutually exclusive investment alternatives are being evaluated using the IRR method. The alternatives have a 5-year service life with no salvage value. Capital investment Annual revenues IRR A. 9.0% OB. 3.3% OC. 6.4% OD. 8.3% Alternative Q $10,000 3,100 16.6% (a) Calculate the incremental IRR of investing in Alternative Y rather than Alternative X. Alternative W $15,000 4,300 13.3% b) If the incremental IRR you calculated in (a) is lower than the MARR, which alternative is more economical and what is the basis for your decision?

The following two mutually exclusive investment alternatives are being evaluated using the IRR method. The alternatives have a 5-year service life with no salvage value. Capital investment Annual revenues IRR A. 9.0% OB. 3.3% OC. 6.4% OD. 8.3% Alternative Q $10,000 3,100 16.6% (a) Calculate the incremental IRR of investing in Alternative Y rather than Alternative X. Alternative W $15,000 4,300 13.3% b) If the incremental IRR you calculated in (a) is lower than the MARR, which alternative is more economical and what is the basis for your decision?

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

(b) If the incremental IRR you calculated in (a) is lower than the MARR, which alternative is more economical and what is the basis for your decision?
O A. Alternative Q because it has an IRR higher than that of Alternative W
B. Alternative W because the incremental IRR is lower than the MARR
OC. Alternative Q because the incremental IRR is lower than the MARR
O D.
They are economically equivalent because Alternative Q has a higher IRR but based on a lower initial capital investment, while Alternative W has a lower
IRR but based on a higher initial capital investment
O E. Alternative W because it has both a higher initial capital investment and higher annual revenues than alternative Q

The following two mutually exclusive investment alternatives are being evaluated using the IRR method. The alternatives have a 5-year service life with no
salvage value.
Capital investment
Annual revenues
IRR
O A. 9.0%
B. 3.3%
O C. 6.4%
D. 8.3%
Alternative
Q
$10,000
3,100
16.6%
(a) Calculate the incremental IRR of investing in Alternative Y rather than Alternative X.
Alternative
W
$15,000
4,300
13.3%
(b) If the incremental IRR you calculated in (a) is lower than the MARR, which alternative is more economical and what is the basis for your decision?

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