Three mutually exclusive alternatives are being considered:

At the end of its useful life, an alternative is not replaced. If the MARR is 10%, which alternative should be selected:

(a) Based on the payback period?

(b) Based on benefit-cost ratio analysis?

A Initial cost $500 $400 $300 Benefit at end of the first year Uniform benefit at end of 200 200 200 125 100 100 Subsequent years Useful life, in years 4