Define Incremental Analysis in the evaluation of ROR, and give an example (other than the examples...

Define Incremental Analysis in the evaluation of ROR, and give an example (other than the examples in the slides or the

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If applied to the selection of service producing investments , the ROR will be infinite. This is because we are considering only costs ( negative cash) and not any revenue ( positive cash ) .

In the case of evaluation of Rate of Return, incremental analysis refers to the analysis performed in order to avoid the problem of ROR. The costs of one alternative are subtracted from the costs of other alternative, the difference of the two costs will give us savings ( positive or negative). The ROR analysis are performed on these incremental costs.lf incremental ROR is greater than the minimum acceptable ROR , select the initial cost alternative and vice versa.

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Rahul Sunny answered 1 year ago

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