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Schneeberger, Inc. is considering investing in one of two alternatives for increasing the acceleration of its linear motor actuators. The first, alternative X, requires an
Schneeberger, Inc. is considering investing in one of two alternatives for increasing the acceleration of its linear motor actuators. The first, alternative X, requires an initial investment of $180,000 and its cash flows exhibit an annual rate of return of i"X = 19%. The second, alternative Y, requires an initial investment of $120,000 and its cash flows have an annual rate of return of = 21%. Schneeberger's MARR is 20% per year. Answer the following questions: (a) Will the rate of return on the incremental investment in X be larger or smaller than m? (b) what is the expected X-Y? The rate of return on the increment is less than 19% per year. The expected rxy is 7%
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