Please use the Challenger-Defender rate of return analysis (pair-wise incremental analysis)

1. Problem 837. (30 points) A firm must decide which of three alternatives to adopt to expand its capacity. The firm wishes a minimum annual profit of 20% of the initial cost of each separable increment of investment. Any money not invested in capacity expansion can be invested elsewhere for an annual yield of 20% of initial cost. A B C Alternative Initial Cost Annual Profit Profit Rate S S100,000 S30000 30% O $300,000 S66,000 22% S ISS500000 s80,000 16% O Which alternative should be selected? Use a challenger-defender rate of return analysis (pair-wise incremental analysis), HINTThe life of the investment is considered infinite (I - AP