Question: Use Rate of Return Analysis to determine whether Alternative A or B should be chosen. Assume the MARR is 6% per year, compounded annually. Alternative

 Use Rate of Return Analysis to determine whether Alternative A or

Use Rate of Return Analysis to determine whether Alternative A or B should be chosen. Assume the MARR is 6% per year, compounded annually. Alternative A Alternative B Initial Cost 750 1239 190 290 Annual Benefit Salvage Value Useful Life (yrs) 0 0 5 5 Alternative B should be chosen, because the incremental rate of return of B-A is 0.75%, which is less than the MARR Alternative B should be selected because its rate of return is 5.48%, which is less than the MARR Alternative A should be selected because its rate of return is 8.43%, which is greater than the MARR Alternative A should be chosen, because the incremental rate of return of B-A is 0.75%, which is less than the MARR

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