A 10-year, 12.00%, $2,000 bond that pays dividends quarterly can be purchased for $1,827. This means that $1,827 is spent on the bond now. Every quarter, $60.00 is provided to the purchaser as the dividend. After 10 years, $2,000 is given to the purchaser. If the bond is purchased and pays as scheduled, which of the following ranges of effective rate of return will the purchaser receive? O 13.50% - 14.50% C) 12.00% - 12.50% C) 14.51% - 16.51% 0 12.50% - 13.25% Use Rate of Return Analysis to determine whether Alternative A or B should be chosen. Assume the MARR is 4% per year, compounded annually. Alternative A Alternative B Initial Cost 989 Annual Benet Salvage Value Useful Life (yrs) O Alternative A should be chosen, because the incremental rate of return of B-A is 0.75%, which is less than the MARR Q Alternative B should be selected because its rate of return is 3.65%, which is less than the MARR O Alternative A should be selected because its rate of return is 6.40%, which is greater than the MARR 0 Alternative B should be chosen, because the incremental rate of return of B-A is 0.75%, which is less than the MARR Which alternatives can be eliminated immediately in the first step of incremental rate of return analysis, if MARR = 11.0%? Do-nothing A B C D First cost $9,000 $4,500 $9,000 $4,500 Annual O 1,659 931 1,828 717 benefit Life 10 yrs ROR 13.0% 16.0% 15.5% 9.5% O D only O D and A O D and B O D and CWhich increment should be examined first in incremental rate of return analysis, if MARR = 11.5%? Do-nothing A B C D First cost 0 $6,500 $5,000 $9,500 $4,000 Annual O 1,222 1,035 1,857 679 benefit Life 10 yrs ROR 13.5% 16.0% 14.5% 11.0% O A-B O A-C O B-C O B-AWhich alternative should be selected using incremental rate of return analysis, if MARR = 12.0%? Do-nothing A B C D First cost O $5,500 $3,500 $9,500 $6,500 Annual 0 1,014 697 1,821 1,081 benefit Life 10 yrs ROR 13.0% 15.0% 14.0% 10.5% O C, because the C-B increment has a ROR of 13.41% and the A-B increment has a ROR of 9.33% O something other than C, because C costs the most initially O C because C has the highest annual benefit O B, because its ROR is the highestTwo mutually exclusive projects are under consideration: Year Project A Project B 0 -$9,000 -$10,500 1 4,000 3,000 2 4,000 3,500 3 4,000 4,000 4 4,000 4,500 5 4,000 5,000 Which project should be selected if the simple payback method is used to make the determination? 0 Not enough information Q B; its payback period is longer 0 A; its payback period is shorter