Three investments are being evaluated by a local financial corporation in Manitoba. The table below summarizes expected cash flows for each of the three investments over the next seven years. Due to budget limitations$,$ the corporation will only choose one investment out of the three investments. At a MARR $($Minimum Acceptable Rate of Return$)$ of $8\%,$ answer the following.

Investment

Initial Cost

Ex enses er Year

Return at end of ear $7$

$1$

$$1$ oo$,$ooo

$$40,000$ for the first year, increasing by

$$2,000$ per ear thereafter

$$600,000$

$2$

$$360,000$

$$85,000$ for the first year, increasing by

$$4,000$ er ear thereafter

$3$

$$185,000$

$$55,000$ for the first year, increasing by

$$3,000$ per year thereafter

$$850,000$

a$)$ Determine the economically best investment for the corporation using a rate of return method.

b$)$ Is it always the case for the alternative with the highest rate of return to be the economically best alternative?

c$)$ Are you expecting different results if the comparison is based on Future Worth? $($Hint: no calculations are needed$).$