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IRR or Present Worth

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6. Three mutually exclusive alternatives requiring different investment levels are being considered. The life of all three is 20 years with no salvage value. The MARR is 15%.
Al A2 A3
Investment $ 60,000 $ 30,000 $ 100,000
Cash flow per year $ 10,692 $ 6,162 $ 17,000
Return on total inv. 17.1% 20.0% 16.1%

Find the alternative that should be selected using IRR or Present Worth on the incremental investment. (One or the other, your choice.)

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Solution Summary

IRR or Present Worth is applied.