A needed service can be purchased for $102 per unit. The same service can be provided by equipment that costs $100,000 and that will have a salvage value of $25,000 at the end the end of 10 years. Annual operating expense will be $5500 per year plus $31 per unit.

(a.) If these estimates are correct, what will be the incremental IRR on the investment if 400 units are provided per year? (b.) What will be the incremental IRR on the investment if 250 units are provided per year? (c.) If the firm requiring this service has a MARR is 12% what would be the alternative to select for the service levels in parts (a.) and (b.)

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