Question: Alternative A and B are two mutually exclusive cost alternatives, and one of them must be selected. Using Incremental Analysis, which of the alternatives

Alternative A and B are two mutually exclusive cost alternatives, and one

Alternative A and B are two mutually exclusive cost alternatives, and one of them must be selected. Using Incremental Analysis, which of the alternatives should be recommended based on ERR (the External Rate of Return)? Why? MARR (Minimum acceptable rate of return) is 12% per year while the re-investment rate is 10% per year. The study period is 20 years. Assume repeatability is appropriate for this comparison. Alternative A $ (101,000) $ (6,000) 20 years $ (6,000 ) $ (18,500 ) 10 years Initial capital investment Annual operating expenses Useful life Salvage value None None

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