The Board of Directors at Senico Systems is con­sidering investment in five independent projects, all of which can be considered to last indefinitely. The MARR is 12% per year.

(a) Determine which projects should be selected on the basis of IROR if the investment limita­tion is $60,000.

(b) Determine the overall rate of return if the funds not invested in a project are assumed to earn a rate of return equal to the MARR and the investment limitation is $60,000.




(a) Select projects A, B and C with a total $55,000 investment.

(b) Overall ROR = [30,000(23.3%) + 10,000(19.0%) + 15,000(17.3%)
+ 5,000(12.0%)]/60,000
= 20.1%

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