Question: Consider two mutually exclusive alternatives stated in year-O dollars. Both alternatives have a 3-year life with no salvage value . Assume the annual inflation rate

Consider two mutually exclusive alternatives stated in year-O dollars. Both alternatives have a 3-year life with no . Assume the annual inflation rate is 5%, an income tax rate of 25%, and straight line depreciation. The minimum attractive rate of return (MARR) is 7%. Use rate of return analysis to determine which alternative is preferable.

Year 0 $420 200 200 200 -$300 150 150 150 2

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