Consider the following two mutually exclusive alternatives (do not consider the “Do Nothing” alternative). Each alternative has a 10-year useful life. If the MARR is 10.0%, which alternative should be selected? Answer in terms of incremental rate of return analysis
Cash Flow A B B – A
Initial cost (–$60,000) (–$90,000) (–$30,000)
EUAB $10,000 $15,000 $5,000
Salvage $ 8,000 $ 6,000 (- $2,000)