Answer 4 & 5

2). The five alternatives are being evaluated by the rate of return method, using the following information: Initial investment. $ Individual RoR Rate of Return,% Incremental RoRN6, when compared with alternative V W XY Z Alternative -25,000 -35,000 -40,000 60,000 9.6 15.1 13.4 25.4 20.2 27.3 19.4 35.3 25.0 - 0.0 38.5 24.4 - 46.5 27.3 Z -75,000 If the alternatives are independent and MARR-20% per year, which alternative (s) should be selected? A. W, Y and Z B. Y and Z C. Y only D. None of the preceding If alternatives w and Y are mutually exclusive and MARR-16% per year, which one ofthe two alternatives is preferable? A. alternative W 4) B. alternative X C. both are equally good D. neither one is good 5). Alternative W is contingent on Y; and V, X, Y, Z are independent; which alternative (s) should be selected if MARR = 1 4% per year? A. only Y B. Y and VW C. W, Y and Z D. W, X, Y and Z