Question

Question 9 (4 points) When the cash flow of the shemative with the lower In v estment is subtracted from that with the ligherita Investment, a rate of return on the Incremental cash flow that equals or exceeds the MARR means the lower Initi Investment alternative is the more attractive True False Question 10 (4 points) In the incremental ROR analysis for multiple mutually exclusive Nternatives. If the Increme ROR is equal or exceed the MARR, the Challenger selected and becomes the "Defender for the next round of relysis True False Question 11 (4 points) When an incremental rate of return analyb W anducted correctly the alternative Identified as best by the present worth method will also be identified as best by the incremental ROR analysis True False Question 12 (4 points) to conduct an incremental In evaluating mutually exclusive alternatives on the basis of rate of return. It is necesca ROR" in order to obtain the same ranking as the PW and AW methods. True False

Answer 1

9. Statement is FALSE

When incremental IRR > MARR, higher initial cost alternative is selected

10.

Statement is TRUE

When incremental IRR > MARR, higher initial cost alternative is selected, and this becomes lower initial cost alternative for next round

11

Statement is TRUE.

Alternative identified as best alternative will be the same if the analysis is done properly by any method

12

Statement is TRUE

ROR values for individual projects/alternatives may be more or less. but when incremental ROR analysis is done alternative identified will be the same as with any other approach