Either of the cost alternatives shown below can be used in a chemical refining process. If the company’s MARR is 15% per year, determine which should be selected on the basis of an incremental ROR analysis.

A

B

First cost ,$

− 40,000

− 61,000

Annual cost, $/year

− 25,000

− 19,000

Salvage value, $

8,000

11,000

Life, years 5

5

5

      –       A.       B.       C.       D.       E.       F.   

The incremental rate of return computed using a present worth analysis is nearest to is the incremental rate of return to be found       –       A.       B.       C.       D.       E.       F.   

Which alternative is to be chosen? A.

15% B.

17% C.

Alternative A D.

16% E.

14% F.

Alternative B

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