Evaluation of Alternatives at i=10% per year BA 5,000 after 10 years 60,000 35,000 20,000 First Cost (S) 3,000 4,000 6,000 Annual O&M (S/year) 2,000 after 5 years of operation (8) 0 Major Repair of operation 11,000 10,500 Annual revenues (S/year) 10,000 15 10 life (years) 5 2,000 2,000 2,000 Salvage (S) The incremental Modified (B/C) of C as challenger and B as defender at i=10% per year is 1.17 The incremental IRR of C as challenge 0.82 0.85 0.55 1.13