SECTION 6.4/USEFUL LIVES ARE EQUAL TO THE STUDY PERIOD 257 Arrange (rank-order) MEAs by Increasing Capital Investment Establish a Current Base (Alternative): Cost Alternatives-Select First Alternative in Rank-Order (LCI) with LCI that Is Acceptable: o IRR MARR, or o PW FW or AW (at MARR) 0 Select the Next MEA Develop Incremental (A) Cash Flow Cash Flow)-(Next MEA Cash Flow) (Current Base Cash Flow) is (Cash Flow) Acceptable? IRR MARR, or PW FW or AW (at MARR) 20 NO YES No Is This the MEA? Is This theNoThis MEA Is the New Current Base MEA YES YES STOP The Current Base Is the Preferred Alternative STOP This MEA Is the Preferred Alternative MEA: mutually exclusive alternative LCI: least capital investment Figure 6-6 Incremental Investment Analysis Procedure capital investment and check the profitability criterion (PW, etc.) values. Continue until an acceptable alternative is obtained. If none is obtained, the do-nothing alternative is selected. 3. Use iteration to evaluate differences (incremental cash flows) between alter natives until all alternatives have been considered. (a) If the incremental cash flow between the next (higher capital investment) alternative and the current selected alternative is acceptable, choose the next alternative as the current best alternative. Otherwise, retain the last