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There are two unequal life time mutually exclusive alternative investments, A and B with following cash flow. Other opportunities exist at 12% minimum rate return.

There are two unequal life time mutually exclusive alternative investments, A and B with following cash flow. Other opportunities exist at 12% minimum rate return.

C=$150 I=$55 I=$50 I=$45 I=$40 I=$35 L=$150
A)
0 1 2 3 4 5

C=$100 I=$50 I=$45 I=$40 L=$100
B)
0 1 2 3

C: Cost, I:Income, L:Salvage

Using ROR and NPV analysis, which investment is economically better? Please include the incremental analysis and show all your work.

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