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.
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(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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