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When comparing two mutually exclusive alternatives by the ROR method, if the rate of return on the alternative with the higher first cost is less than that of the lower first-cost alternative: (a) The rate of return on the increment between the two is greater than the rate of return for the lower first-cost alternative (b) The rate of return on the increment is less than the rate of return for the lower first-cost alternative (c) The higher first-cost alternative may be the better of the two alternatives (d) The lower first-cost alternative should be selected

When comparing two mutually exclusive alternatives by the ROR method, if the rate of return on the alternative with the higher first cost is less than that of the lower first-cost alternative: (a) The rate of return on the increment between the two is greater than the rate of return for the lower first-cost alternative (b) The rate of return on the increment is less than the rate of return for the lower first-cost alternative (c) The higher first-cost alternative may be the better of the two alternatives (d) The lower first-cost alternative should be selected

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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When comparing two mutually exclusive alternatives
by the ROR method, if the rate of return on
the alternative with the higher first cost is less than
that of the lower first-cost alternative:
(a) The rate of return on the increment between
the two is greater than the rate of return for
the lower first-cost alternative
(b) The rate of return on the increment is less
than the rate of return for the lower first-cost
alternative
(c) The higher first-cost alternative may be the
better of the two alternatives
(d) The lower first-cost alternative should be
selected

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