Table 1 shows the initial investment and the overall rate of return of four alternatives. It also provides the incremental rate of return (i*) for each pair of alternatives. If the alternatives are mutually exclusive, which alternative should be selected if the minimum attractive rate of return (MARR) value is 14.5%? Use an incremental rate of return analysis method.

Incremental ROR, change i%, When compared to the alternative

Alternative Initial Investment, $ Overall ROR, i% A B C

A -60,000 11.7 - - -

B -90,000 22.2 43.4 - -

C -140,000 17.8 22.5 10.0 -

D -190,000 15.8 17.8 10.0 10.0

Question

Table 1 shows the initial investment and the overall rate of return of four alternatives. It also provides the incremental rate of return (i*) for each pair of alternatives. If the alternatives are mutually exclusive, which alternative should be selected if the minimum attractive rate of return (MARR) value is 14.5%? Use an incremental rate of return analysis method.

Incremental ROR, change i%, When compared to the alternative

Alternative	Initial Investment, $	Overall ROR, i%	A	B	C
A	-60,000	11.7	-	-	-
B	-90,000	22.2	43.4	-	-
C	-140,000	17.8	22.5	10.0	-
D	-190,000	15.8	17.8	10.0	10.0

Accepted Answer

The Answer is in the image, click to view ...

Question

Table 1 shows the initial investment and the overall rate of return of four alternatives. It also provides the incremental rate of return (i*) for

Step by Step Solution

Step: 1

Get Instant Access with AI-Powered Solutions

Step: 2

Step: 3

Ace Your Homework with AI

Students also viewed these Accounting questions

Question

Question

Question

Question

Question

Question

Question

Question

Question