11. 6.68 EPC, Inc. uses a MARR of 12% per year compounded semiannually. The company is evaluating two new processes for expanding its epoxy resin operations. The cash flows associated with each process are shown below. In evaluating the processes on the basis of an ROR analysis, the incremental investment rate of return equation to use is:

Table Summary: Table divided into 3 columns with the headings marked as:

column 1: alternative; column 2: I; and column 3: J.

Alternative I J First cost, $ −420,000 −520,000 AOC, $/year −15,000 −12,000 Salvage value, $ 5,000 6,000 Life, years 3 3 1. 0 = −100,000 + 3000(P/A, Δi*,3) + 1000(P/F, Δi*,3)

2. 0 = −420,000 − 15,000(P/A, Δi*,3) + 5000(P/F, Δi*,3)

3. 0 = −520,000 − 12,000(P/A, Δi*,3) + 6000(P/F, Δi*,3)

4. 0 = −100,000 − 3000(P/A, Δi*,3) + 1000(P/F, Δi*,3)