Question
A large company has the opportunity to select one of seven projectsA, B, C, D, E, F, Gor choose the (do-nothing) alternative. Each project requires
A large company has the opportunity to select one of seven projectsA, B, C, D, E, F, Gor choose the (do-nothing) alternative. Each project requires a single initial investment as shown in the table below. Information on each alternative was fed into a computer program that calculated the IRR for each project and all the pertinent incremental IRRs as shown in the table below.
Project | Initial investment | Rate of return | Incremental IRR | |||||
A | B | C | D | E | F | |||
A | $10,000 | 10% |
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B | $12,000 | 9% | 7% |
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C | $13,000 | 8% | 2% | 1% |
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D | $15,000 | 7% | 9% | 5% | 9% |
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E | $17,000 | 6% | 5% | 1% | 6% | 3% |
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F | $19,000 | 5% | 8% | 2% | 5% | 5% | 5% |
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G | $25,000 | 7% | 3% | 8% | 7% | 7% | 3% | 10% |
If MARR is 6.5%, indicate which decision should be taken.
Select project D | ||
Select project A | ||
Select project E | ||
Select project G | ||
None of the above |
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