The rate of return for alternative X is 18% per year and for alternative Y is 17% per year, with Y requiring a larger initial investment. If a company has a minimum attractive rate of return of 16% per year, a)The company should select alternative X. b)The company should select alternative Y. c)The company should conduct an incremental analysis between X and Y to select the economically better alternative. d)The company should select the do-nothing alternative.
The rate of return for alternative X is 18% per year and for alternative Y is 17% per year, with Y requiring a larger initial investment. If a company has a minimum attractive rate of return of 16% per year, a)The company should select alternative X. b)The company should select alternative Y. c)The company should conduct an incremental analysis between X and Y to select the economically better alternative. d)The company should select the do-nothing alternative.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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a)The company should select alternative X.
b)The company should select alternative Y.
c)The company should conduct an incremental analysis between X and Y to select the economically better alternative.
d)The company should select the do-nothing alternative.
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