A company is considering two alternatives, one of which must be implemented. Of the two projects, A has the higher maintenance cost, but B has the higher investment cost. The appropriate (and properly calculated) incremental IRR is 17.6%. Which alternative is preferred if the Minimum Attractive Rate of Return is 20%.

Question

24 February, 01:54

+4

Answers (1)

Know the Answer?

Jazmin Daugherty · Answer 1

The company will choose A

Explanation:

Since the incremental IRR (A-B) = 17.6% and MARR=20%, this indicates IRR is less then MARR (IRR