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Compare the following 2 alternatives using the incremental rate of return method. Determine which is the...

Compare the following 2 alternatives using the incremental rate of return method. Determine which is the most efficient and which is the most profitable. MARR=8% per year compounded yearly. (Compute the actual IRR values)

Alter.

Construction cost

Annual Benefits

Salvage

Life (yrs)

A

$1,250,000

$300,000

$12,500

12

B

$750,000

$270,000

$10,000

7
Engineering   Civil-Engineering   
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Answer #1

Ans. the most efficient and most profitable option is Alternative B

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