Calculate the present worth on incremental investment

Reference no: EM13203428

The following cash flows represent two mutually exclusive investment alternatives:

Year A1 A2
0 -$18,000 -$23,500
1 10,000 15,000
2 9,000 13,500
3 9,000 13,500
4 9,000 13,500
5 9,000 16,500

a. Find the IRR (Internal Rate of Return) on the incremental cash flow. For an MARR (Minimal Acceptable Rate of Return) of 15%, which one would you select?
b. Calculate the present worth on total investment for MARR = 12%(Minimal Acceptable Rate of Return)
c. Calculate the present worth on incremental investment for the same MARR (Minimal Acceptable Rate of Return) and select the best alternative.

Reference no: EM13203428

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