The four alternatives described below are being evaluated by the rate of return method.

(a) If the proposals are independent, which should be selected at a MARR of 16% per year?
(b) If the proposals are mutually exclusive, which one should be selected at a MARR of 9%
per year?
(c) If the proposals are mutually exclusive, which one should be selected when the MARR is
12% per year?

What will be an ideal response?


(a) Proposals are independent; Select A and C
(b) Alternative A is justified. B vs. A yields 1%, eliminate B; C vs. A yields 7%,
eliminate C; D vs A yields 10%, eliminate A. Select D
(c) Alternative A is justified. B vs A yields 1%, eliminate B; C vs A yields 7%,
eliminate C; D vs A yields 10%, eliminate D. Select A

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