Consider the following two mutually exclusive alternatives for reclaiming a deteriorating inner-city neighborhood (one of them must be chosen). Notice that the IRR for both alternatives is 27.16%.

a. If MARR is 15% per year, which alternative is better?

b. What is the IRR on the incremental cash flow [i.e., (YX)]?

c. If the MARR is 27.6% per year, which alternative is better?

d. What is the simple payback period for each alternative?

e. Which alternative would you recommend?

a. The PW of the alternative X is $____

The PW of the alternative Y is $____

b. The IRR on the incremental cash flow is ____%

c. The PW of the alternative X is $____

The PW of the alternative Y is $____

d. The simple payback for the alternative X is ____years

The simple payback for the alternative Y is ____years

EOY ARR Alternative $105,000 $105,000 $50,000 $0 $51,000 $0 $70,194 $215,894 27.16% 27.16%