The rates of return on alternatives X and Y are 15% and 12%, respectively. Alternative Y requires

Question:

The rates of return on alternatives X and Y are 15% and 12%, respectively. Alternative Y requires a larger investment than alternative X.
(a) What is known about the rate of return on the increment of investment between the two alternatives?
(b) If the is 12%, which alternative should be selected and why?

MARR
Minimum Acceptable Rate of Return (MARR), or hurdle rate is the minimum rate of return on a project a manager or company is willing to accept before starting a project, given its risk and the opportunity cost of forgoing other...