You are considering five projects, all of which can be considered to last indefinitely. If the com­pany’s MARR is 15% per year, determine which should be selected if they are (a) indepen­dent projects, and (b) mutually exclusive alternatives.


(a) Select all projects whose ROR ? MARR of 15%. Select A, B, and C

(b) Eliminate all alternatives with ROR < MARR; compare others incrementally:
Eliminate D and E
Rank survivors according to increasing first cost: B, C, A

C vs B: ?i* = 800/5000
= 0.16 (16%) > MARR Eliminate B

A vs C: ?i* = 200/5000
= 0.04 (4%) < MARR Eliminate A

Select alternative C

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