Suppose that we are analyzing the following six mutually exc…
Suppose that we are analyzing the following six mutually exclusive alternatives using the rate-of-return method. The useful life of each alternative is 10 years, and the MARR is 10% per year. All salvage values are assumed to be zero. Alternative First Cost Net Yearly Benefits Rate of Return A $ 900 $ 150 10.6% B 1,500 276 13.0% C 2,500 400 9.6% D 4,000 925 19.1% E 5,000 1,125 18.3% F 7,000 1,425 15.6% It is also possible to “do nothing.” Use rate of return analysis to select the best alternative. Be sure to show all your comparisons, in the proper sequence, as outlined by the procedure illustrated in class. (NOTE: You do NOT have to solve for exact ROR’s; try to approximate to the nearest 1 or 2%). Which alternative should be selected? Justify your selection with your scratch work. Most points will be awarded for your justification via scratch work, NOT a correct multiple choice selection.