A food processing company is considering two types of moisture analyzers. Only one can be se­lected. The company expects an infrared model to yield a rate of return of 27% per year. A more ex­pensive microwave model will yield a rate of return of 19% per year. If the company’s MARR is 19% per year, can you determine which model should be purchased solely on the basis of the overall rate of return information provided? Why or why not?

What will be an ideal response?


The company should select the lower cost infrared model because the rate of return on the increment of investment for the microwave model has to be lower than 19%

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