In: Economics
Compare the following 2 alternatives using the incremental rate of return method. Determine which is the most efficient and which is the most profitable. MARR=8% per year compounded yearly. (Note: For full credit, I want you to compute the actual IRR values)
Alter. |
Construction cost |
Annual Benefits |
Salvage |
Life (yrs) |
A |
$1,250,000 |
$300,000 |
$12,500 |
12 |
B |
$750,000 |
$270,000 |
$10,000 |
7 |