Problem# 1 (10 pnts): Given the following two alternatives where incremental analysis is required: A1 (5)...

 

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Problem# 1 (10 pnts): Given the following two alternatives where incremental analysis is required: A1 (5) A2 (5) -3,000 -12,000 1,350 4,200 1,800 6,225 1,500 6,330 0 2 3 IRR AA a) Are you going to go for A1-A2? Alternatively, A2-A1 and why? b) Compute the IRR on this increment of investment. Just set up the equation (DO NOT ATTEMPT TO SOLVE IT) ? c) If the IRR of this increment is 15% and the MARR is 10% which project will you select and why? Problem# 1 (10 pnts): Given the following two alternatives where incremental analysis is required: A1 (5) A2 (5) -3,000 -12,000 1,350 4,200 1,800 6,225 1,500 6,330 0 2 3 IRR AA a) Are you going to go for A1-A2? Alternatively, A2-A1 and why? b) Compute the IRR on this increment of investment. Just set up the equation (DO NOT ATTEMPT TO SOLVE IT) ? c) If the IRR of this increment is 15% and the MARR is 10% which project will you select and why?

Answer rating: 100% (QA)

a I will go for A2 A1 because it has a positive incremental cash flow from year 1 onwar... View the full answer