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Two alternatives for a construction project are being considered. Both projects have a 7-year life. Alternative A has an initial cost of $2,000 and yields

Two alternatives for a construction project are being considered. Both projects have a 7-year life. Alternative A has an initial cost of $2,000 and yields $585 annually for 7 years. Alternative B initially costs $4,500 and yields $1,100 annually for 7 years. The rate of return on the difference between the alternatives is approximately:

  • 10.1%
  • 22.0%
  • 15.6%
  • 6.4%

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