Our cat Fred's summer kitty-cottage needs a new roof. He's considering the following two proposals and feels a 15-year analysis period is in line with his remaining lives. Which roof should he choose if his MARR is 12%? What is the actual value of the IRR on the incremental cost? (There is no salvage value for old roofs.) Slate Thatch

Our cat Fred's summer kitty-cottage needs a new roof. He's considering the following two proposals and feels a 15-year analysis period is in line with his remaining lives. Which roof should he choose if his MARR is 12%? What is the actual value of the IRR on the incremental cost? (There is no salvage value for old roofs.)

Slate Thatch First cost Annual upkeep $20 $40 5 2 Service life, in years 3 5

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important... 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...