The plant manager at Automaton Robotics is looking at the summarized incremental rate of return information shown below for fi ve mutually exclusive alternatives, one of which must be chosen. The table includes the overall ROR and the incremental comparison of alternatives. Which alternative is best if the minimum attractive rate of return is ( a ) 15% per year and ( b ) 12% per year?
|
|
|
Incremental Rate of Return, %
|
|
Alternative
|
First Cost, $
|
Overall ROR, %
|
A
|
B
|
C
|
D
|
E
|
|
A
|
-80,000
|
14
|
-
|
12
|
11
|
17
|
24
|
|
B
|
-60,000
|
16
|
12
|
-
|
14
|
23
|
21
|
|
C
|
-40,000
|
17
|
11
|
14
|
-
|
35
|
29
|
|
D
|
-30,000
|
12
|
17
|
23
|
35
|
-
|
17
|
|
E
|
-20,000
|
8
|
24
|
21
|
29
|
17
|
-
|