This question is based on the follow­ing five alternatives that are evaluated by the rate of return method.



If the alternatives are mutually exclusive and the MARR is 25% per year, the alternative to select is: (choose one)



(a) B

(b) D

(c) E

(d) None of them


Rank alternatives in terms of increasing first cost: DN, A, B, C, D, E
Eliminate alternatives A, B, C and E because i* < MARR = 25%
Only D remains; select D
Answer is (b) D

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What will be an ideal response?

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