Glenlyon PPE Ltd is considering the purchase of one of two acceptable pieces of equipment. Each design is expected to have individual advantages. The chief accountant is quite conservative and likes to rely on the ARR as his chief decision-support tool. The assistant accountant, on the other hand, is a new graduate and she has worked out the expected IRRs for the two items of plant.

a. What more financial information does the board need to make a decision?
b. No, it would be desirable to also have NPV information to ascertain the wealth generating potential of the equipment?
c. If the calculated returns all exceed the entity's required minimum rate, which design would you recommend? Why?

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Model A 40 16 Model B 35 18 ARR (%) IRR (96)