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An investor considers two mutually exclusive projects (A & B) and calculated the rate of returns of individual project and the incremental rate of return
An investor considers two mutually exclusive projects (A & B) and calculated the rate of returns of individual project and the incremental rate of return as in the table. Choose all of correct statements. Project A Project B Incremental (B-A) Year 0 -$3,000 -$5,000 -$2,000 Year 1 $1,350 $1,350 0 Year 2 $1,800 $1,800 0 Year 3 $1,500 $5,406 $3,906 ROR 25% 25% 25% 1. Project A and B have the same ROR, but their NPW are not necessarily the same. 2. The investor is indifferent if the investor's MARR is 25%. 3. Project B is more economical, as long as the investor's MARR is less than 25%. 4. The investor should not invest on any of two projects if the investor's MARR is more than 25%. An investor considers two mutually exclusive projects (A & B) and calculated the rate of returns of individual project and the incremental rate of return as in the table. Choose all of correct statements. Project A Project B Incremental (B-A) Year 0 -$3,000 -$5,000 -$2,000 Year 1 $1,350 $1,350 0 Year 2 $1,800 $1,800 0 Year 3 $1,500 $5,406 $3,906 ROR 25% 25% 25% 1. Project A and B have the same ROR, but their NPW are not necessarily the same. 2. The investor is indifferent if the investor's MARR is 25%. 3. Project B is more economical, as long as the investor's MARR is less than 25%. 4. The investor should not invest on any of two projects if the investor's MARR is more than 25%
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