Calculating ROR and incremental ROR in the given cases

Solutions are provided for the problems given below.

1. Consider the following data for three alternatives A, B and C
Year A B C (A-B) (A-C) (C-B)
0 -3200 -1600 -2400 -1600 -800 -800
1 800 380 700 420 100 320
2 800 380 700 420 100 320
3 800 380 700 420 100 320
4 800 380 700 420 100 320
6 800 380 700 420 100 320
7 800 380 700 420 100 320
ROR 16% 15% 22% 18% -3% 35%

MARR = 10 %. The recommended alternative is A, B or C.
Correct option is C.

8-3
Consider three alternatives A, B and "do-nothing."
Year A B
0 -$100 -$150
1 30 43
2 30 43
3 30 43
4 30 43
5 30 43

3. Problem 8-3: What is the incremental ROR for (B-A).
4. Problem 8-3: If MARR = 6%, which alternative should be selected?
5. Problem 8-3: If MARR = 8%, which alternative should be selected?
6. Problem 8-3: If MARR = 10 %, which alternative should be selected?
7. Problem 8-3: If MARR = 16%, which alternative should be selected?

8-14
The following three mutually exclusive alternatives have no salvage value after 5 years:
A B C
First Cots $200 $300 $600
Uniform annual benefit 59.7 77.1 165.2
Computed rate of return 15% 9% 11.7%

8. Problem 8-14: The Incremental ROR for (B-A) is?
9. Problem 8-14: What is the value of the Incremental ROR for (C-B)?
10. Problem 8-14: For what range of values of MARR is Alt C the preferred alternative?

8-15
Consider four mutually exclusive alternatives, each having an 8-year useful life:
A B C D
First Cost $1000 $800 $600 $500
Uniform annual benefit 122 120 97 122
Salvage value 750 500 500 0
If the minimum attractive rate of return is 8%,

11. Problem 8-15: The Rate of Return of A is?
12. Problem 8-15: The incremental ROR of ( C-D ) is?
13. Problem 8-15: The recommended alternative is?

5-83
Six mutually exclusive alternatives, A-F, are being examined. For an 8% interest rate, which alternative should be selected? Each alternative has a 6-year useful life.
Initial Cost Uniform annual benefit
A $20 $6.00
B 35 9.25
C 55 13.38
D 60 13.78
E 80 24.32
F 100 24.32

14. Problem 5-83: The rate of return for alternative A is?
15. Problem 5-83: The rate of return for alternative B is?
16. Problem 5-83: The rate of return for alternative C is?
17. Problem 5-83: The rate of return for alternative D is?
18. Problem 5-83: The rate of return for alternative E is?
19. Problems 5-83: The rate of return for alternative F is?
20. Problems 5-83: The incremental rate of return for the increment B-A is?
21. Problems 5-83: The incremental rate of return for the increment C-B is?
22. Problems 5-83: The incremental rate of return for the increment D-B is?
23. Problems 5-83: The incremental rate of return for the increment E-B is?
24. Problems 5-83: The incremental rate of return for the increment E-D is?
25. Problems 5-83: The incremental rate of return for the increment F-D is?
26. Problems 5-83: The incremental rate of return for the increment E-C is?
27. Problems 5-83: incremental rate of return for the increment E-A is?
28. Problems 5-83: The incremental rate of return for the increment D-A is?
29. Problems 5-83: The incremental rate of return for the increment F-B is?
30. Problems 5-83: The incremental rate of return for the increment C-A is?
31. Problems 5-83: The incremental rate of return for the increment F-A is?
32. Problems 5-83: The incremental rate of return for the increment F-C is?
33. Problems 5-83: The first incremental analysis should be?
34. Problems 5-83: The second incremental analysis should be?
35. Problems 5-83: The third incremental analysis should be?
36. Problems 5-83: The fourth incremental analysis should be?
37. Problems 5-83: The fifth and last incremental analysis should be?
38. Problems 5-83: The selected alternative should be?