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An investor is considering two investments for his portfolio. Investment A requires an initial capital of $11,100. It will generate annual revenues of $4,100 and
An investor is considering two investments for his portfolio. Investment A requires an initial capital of $11,100. It will generate annual revenues of $4,100 and annual costs of $800 with a salvage value of $4,900 at the end of 5 years. On the other hand, Investment B requires an initial capital of $16,000, generates annual revenues of $8,000, annual costs of $1,100 with a salvage value of $9,100 at the end of 5 years. If the investor's MARR is 6% per year, answer the following two questions: Calculate the modified B/C ratio of Alternative A A. 1.87 B. 3.87 C. 2.37 D. 3.37 Calculate the incremental modified B/C ratio of Investment B over A. A. 8.61 B. 10.61 C. 3.89 D. 6.89
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