The following information on four mutually exclusive investment projects is given below. All four projects have the same service life and require investment in year 0 only one. Suppose that you are provided with the following additional information about incremental rates of return between projects. Which project would you choose based on the rate-of-return criterion at a MARR of 22%? Explain the reason behind your selection.

IRR(B-A) = 68%
IRR (D-C) = 33%
IRR (B-C) = 34%
IRR(A-D) = 63%
Note that the additional data for each project is as follows:

 

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Required Investment at Year 0 Project IRR A 1,100 48% B 1,200 66% C 1,800 50% D 2,500 55% Required Investment at Year 0 Project IRR A 1,100 48% B 1,200 66% C 1,800 50% D 2,500 55%

Answer rating: 100% (QA)

MARR 22 First we arrange projects in increasing order of initial cos... View the full answer