Question

Q = -50 400 R = 12.00% AWC = AWB = 3. Use the following table to select the most profitable alternatives. You have to show the processes for your decision by providing the mathmetical equitions; like X > Y, etc. No written description to explanation is needed. MARR = 8.00% The values in the table represent Incremental IRR between Projects in colunm and row. You have to select on of the mutually exclusive alternatives; "Do Nothing" is not an option. The initial cost rank is as follows: A>B>C>D Α В 1 С 1 D 8.50% 7.00% 9.00% 8.50% 7.50% 8.20% 7.00% 7.50%! P8.50% 9.00% 8.20% 8.50% Final Selection B D moratos benefits every year and D

Answer 1

3.

The first incremental analysis will be between C & D where D has lowest investment, where C>D

Incremental rate of return = 8.5%

Since above return is higher than MARR of 8%, then C will be selected.

The second incremental analysis will be between B and C. Here, B > C

Incremental rate of return = 7.5%

Since above return is less than MARR of 8%, then C (with lower investment) will be selected.

The third incremental analysis will be between A and C. Here, A > C

Incremental rate of return = 7%

Since above return is less than MARR of 8%, then C (with lower investment) will be selected.

So, most profitable alternative is alternative C.