1 Which alternative should be selected using incremental rate of return analysis, if MARR = 8.5%?Do-nothing ABCFirst cost$5,500$3,000$9,500 $4,500Annual8955751,751626benefitLife10 yrsROR10.0%14.0%13.0%|6.5%O B, because its ROR is the highestO something other than C, because C costs the most initiallyO C, because the C-B increment has a ROR of 12.53% and the A-B increment has a ROR of 4.76%O C because C has the highest annual benefit

Here the annual benefits are in the form of an annuity. For incremental analysis we can do an…

Which alternative should be selected using incremental rate of return analysis, if MARR = 8.5%? %3D Do-nothing A First cost $5,500 $3,000 $9,500 $4,500 Annual 895 575 1,751 626 benefit Life 10 yrs ROR 10.0% 14.0% 13.0% 6.5%

Which alternative should be selected using incremental rate of return analysis, if MARR = 8.5%? %3D Do-nothing A First cost $5,500 $3,000 $9,500 $4,500 Annual 895 575 1,751 626 benefit Life 10 yrs ROR 10.0% 14.0% 13.0% 6.5%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

Which alternative should be selected using incremental rate of return analysis, if MARR = 8.5%?
Do-nothing A
B
C
First cost
$5,500
$3,000
$9,500 $4,500
Annual
895
575
1,751
626
benefit
Life
10 yrs
ROR
10.0%
14.0%
13.0%
|6.5%
O B, because its ROR is the highest
O something other than C, because C costs the most initially
O C, because the C-B increment has a ROR of 12.53% and the A-B increment has a ROR of 4.76%
O C because C has the highest annual benefit

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