Consider two mutually exclusive alternatives stated in real dollars. Both alternatives have a 3-year life with no salvage value. Assume the annual inflation rate is 5%, and 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	A	B
0	-$450	-$300
1	$200	$150
2	$200	$150
3	$200	$150