Two alternatives are being considered: . B 5400 9900 First cost Uniform annual benefit Useful life, in 1750 1850 4 8 years If the minimum attractive rate of return is 7%, which alternative should be selected? Solution: 1. Use the increment analysis, we should use 2. Terms n= 3. The Increment CFD has 3 basic patterns: = = O AF= occurred at end of year 4. AROR= % 5. Choose