6-24. Five alternative proposals have been made for the development of a resi- dential rental property. The required land is available on option at a price of $200,000. The following estimates have been made for the plans: Plan A Plan B Plan C Plan D Plan Eola de ghinietooo anib In Annual Investment in Building ert ert Receipts $ 400,000 $176,000 560,000 800,000 1,080,000 1,520,000 260,000 or 380,000 467,000 598,000 Annual Disbursements not (Not Including Income Taxes) $55,000 and W 70,000 100,000 125,000 150,000 q Assume that the choice among these alternatives is to be made using a before- tax i* of 25%. Compute the rates of return before income taxes for each proposal assuming a 40-year life with zero salvage value for each building. Assume that the land will be sold for a net $200,000 at the end of the 40-year period. Compute any prospective rates of return on increments of investment that you believe are relevant for the decision. Which plan, if any, do you recommend? Explain your reasoning. no financial calculator

6-24. Five alternative proposals have been made for the development of a residential rental property. The required land is available on option at a price of $200,000. The following estimates have been made for the plans: Assume that the choice among these alternatives is to be made using a beforetaxi of 25%. Compute the rates of return before income taxes for each proposal assuming a 40-year life with zero salvage value for each building. Assume that the land will be sold for a net $200,000 at the end of the 40 -year period. Compute any prospective rates of return on increments of investment that you believe are relevant for the decision. Which plan, if any, do you recommend? Explain your reasoning. 6-24. Five alternative proposals have been made for the development of a residential rental property. The required land is available on option at a price of $200,000. The following estimates have been made for the plans: Assume that the choice among these alternatives is to be made using a beforetaxi of 25%. Compute the rates of return before income taxes for each proposal assuming a 40-year life with zero salvage value for each building. Assume that the land will be sold for a net $200,000 at the end of the 40 -year period. Compute any prospective rates of return on increments of investment that you believe are relevant for the decision. Which plan, if any, do you recommend? Explain your reasoning