Schneeberger, Inc. is considering investing in one of two alternatives for increasing the acceleration of its linear motor actuators. The first, alternative X, requires an initial investment of $190,000 and its cash flows exhibit an annual rate of return of i*x = 20%. The second, alternative Y, requires an initial investment of $130,000 and its cash flows have an annual rate of return of i*Y = 22%. Schneeberger's MARR is 20% per year. 

Answer the following questions; 

(a) Will the rate of return on the incremental investment in X be larger or smaller than i*X? 

(b) What is the expected i*X-Y?

Answer rating: 100% (QA)

a The rate of return on the incremental investment in X will be smaller than iX To determine this we ... View the full answer