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Two mutually exclusive alternatives A and B are being considered: Year 0 1 2 3 4 5 A $2500 746 746 746 746 746 B
Two mutually exclusive alternatives A and B are being considered:
Year | 0 | 1 | 2 | 3 | 4 | 5 |
A | $2500 | 746 | 746 | 746 | 746 | 746 |
B | $6000 | 1664 | 1664 | 1664 | 1664 | 1664 |
The minimum acceptable rate of return is 8%. After calculation, we can find that the internal rates of return: for A, IRRA = 15%, for B, IRRB = 12% and for BA, IRRBA = 9.8%. Which of the following statements is correct?
Select one:
a. Select neither A nor B because IRRA > MARR and IRRB > MARR
b. Select B because IRRBA > MARR
c. Select A because IRRA > IRRB
d. Select A because IRRBA > MARR
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