The rate-of-return (ROR) method states that the base alternative is the one that instructs us to use incremental analysis to compare the base alternative to the next smallest investment cost alternative. Meaning, if the change in IRR is greater than or equal to MARR, eliminate the base and move on to the next comparison. If the change in IRR is less than MARR, keep the base and move on to the next comparison. Discuss this decision rule.

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