(Solved):Based on the incremental rates of return shown and the company’s MARR of 16% per year, the…

 

Question

. Based on the incremental rates of return shown and the company?s MARR of 16% per year, the alternative that should be selected is (Show your work)

a. Alternative A.

b. Alternative B.

c. Alternative C.

d. Alternative DN.

Comparison Rate of Return, %
A-to-DN 23.4
B-to-DN 8.1
C-to-DN 16.6
A-to-B 25.1
A-to-C 12
B-to-C 8.39

 

EXPERT ANSWER

The answer is b.

We can use the minimum acceptable rate of return (MARR) and the incremental IRR to rank different projects. Specifically, a project Y

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