An investor is considering two mutually exclusive projects. He can obtain a 6% before-tax rate of return on external investments, but he requires a minimum attractive rate of return of7% for these projects. Use a 10 year analysis period to compute the incremental rate of return from investing in Project A rather than

Project B.

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Project A: Project B: Build Drive-Up Buy Land Photo Shop in Hawaii $ 48,500 Initial capital $58,500 Investment Net uniform 6,648 Annual income Salvage value 30,000 138,000 10 years hence Computed rate 8% 1% Of retum