Incremental Rate of Return, %, When Compared with Alternative Initial Overall Rate Alternative Investment, $ of Return, % A в с A -60,000 11.7 В -90,000 22.2 43.3 -140,000 17.9 22.5 10.0 D - 190,000 15.8 17.8 10.0 10.0

Incremental Rate of Return, %, When Compared with Alternative Initial Overall Rate Alternative Investment, $ of Return, % A в с A -60,000 11.7 В -90,000 22.2 43.3 -140,000 17.9 22.5 10.0 D - 190,000 15.8 17.8 10.0 10.0

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter15: Capital Investment Analysis

Section: Chapter Questions

Problem 15.1.1MBA

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

The four alternatives described below are being evaluated.
a. If the proposals are independent, which one(s) should be selected at a MARR of 17% per year?
b. If the proposals are mutually exclusive, which one should be selected at a MARR of 14.5% per year?
c. If the proposals are mutually exclusive, which one should be selected at a MARR of 10.0% per year?

Incremental Rate
of Return, %, When
Compared with
Alternative
Initial
Overall Rate
Alternative
Investment, $
of Return, %
A
в с
A
-60,000
11.7
В
-90,000
22.2
43.3
-140,000
17.9
22.5
10.0
D
- 190,000
15.8
17.8
10.0
10.0

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