Two mutually exclusive cost alternatives, Machine A and Machine B, are being evaluated.

Given the following time events and incremental cash flow, if the MARR is 12% per year, which alternative (Machine A or Machine B) should be selected on the basis of the incremental rate of return analysis? Assume Machine B requires the extra $7,000 initial investment.

(Hint: You can solve with IRR function in Excel)

Year	Incremental Cash Flow ($) (Machine B - Machine A)
0	-7,000
1 - 4	500
5 - 7	1,500
8	3,000

Question 18 options:

	Select neither A nor B and go with DN
	The "Incremental ROR" is less than the MARR, so select Machine A.
	The "Incremental ROR" is more than the MARR, so select Machine B.
	The "Incremental ROR" is less than the MARR, so select Machine B.