You were given three cost-reduction proposals in your lower tier textile operation.

A0 denotes the do-nothing alternative. The required investments are $320,000 for A1, $550,000 for A2, and $820,000 for A3. If the MARR is 15%, what system should be selected?

You already estimated rates of return for the three projects, along with some incremental rates of return:

incremental investment A1-A0=18%, A2-A0=20%,A3-A0=25%,A2-A1=10%,A3-A1=18%,A3-A2=23% ..

different incremental rate of returns are shown above..