1. The better alternative between the first increment is ________________. 2. The better alternative between the second increment is ________________

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
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Given the data for three different alternatives in the table below, determine the best alternative using the incremental rate of return (∆RoR) analysis. MARR =9%.

 

                                    A                      B                      C

First cost                       $15,000            $25,000            $20,000

O &M Cost/ year           1,600                400                  900

Benefit/year                 8,000                13,000              9,000

Salvage value                3,000                6,000                4,600

Life in years                  4                      4                      4

 

1. The better alternative between the first increment is ________________.

2. The better alternative between the second increment is ___________________.

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