Homework Answers
Select Alternative II since its incremental IRR (21.45%) is more than MARR (15%)
| Year | I | II | Incremental CF |
| 0 | -22000 | -29000 | -7000 |
| 1 | 4500 | 7000 | 2500 |
| 2 | 4500 | 6750 | 2250 |
| 3 | 4500 | 6500 | 2000 |
| 4 | 4500 | 6250 | 1750 |
| 5 | 4500 | 6000 | 1500 |
| 6 | 4500 | 5750 | 1250 |
| 7 | 4500 | 5500 | 1000 |
| 8 | 4500 | 5250 | 750 |
| 9 | 4500 | 5000 | 500 |
| 10 | 4500 | 4750 | 250 |
| IRR | 21.45% |
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project using the IRR method when the company MARR IS 12% per year
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your recommendation?
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