Incremental analysis and Present Worth/Annual Worth analysis to select alternative.
MARR = 15%
Alternative A - Initial cost: -7,000
Alternative B - Initial cost: -9,000
Alternative C - Initial cost: -17,000
Alternative A - Annual cash flows per year: -6,000, 2,750, 3,400
Alternative B - Annual cash flows per year: 2,350, 2,700, 300
Alternative C - Annual cash flows per year: 150, 1,000
Alternative A - Salvage value: 0
Alternative B - Salvage value: 12
Alternative C - Salvage value: 12
Alternative D - Salvage value: 12
Alternative A - Life years: 3
Alternative B - Life years: ?
Alternative C - Life years: ?
Alternative D - Life years: ?
C to B Actual CF: -7,000
D to C Incr. ROR comparison: 000'6"
Actual CF: -2,000
Actual CF: -17,000
Actual CF: -8,000
Incremental investment: 0
Incremental investment: -6,000
Incremental cash flow 1: 2,350
Incremental cash flow 1: 2,700
Incremental cash flow 1: 2,750
Incremental cash flow 1: 50
Incremental cash flow 1: 3,400
Incremental cash flow 1: 650
Incremental cash flow 2: 2,350
Incremental cash flow 2: 2,700
Incremental cash flow 2: 2,750
Incremental cash flow 2: 50
Incremental cash flow 2: 3,400
Incremental cash flow 2: 650
Incremental cash flow 3: 2,350
Incremental cash flow 3: 2,700
Incremental cash flow 3: -4,000
Incremental cash flow 3: 2,750
Incremental cash flow 3: 6,750
Incremental cash flow 3: 3,400
Incremental cash flow 3: 650
Incremental cash flow 4: 2,750
Incremental cash flow 4: 50
Incremental cash flow 4: 3,400
Incremental cash flow 4: 650
Incremental cash flow 5: 2,700
Incremental cash flow 5: 2,700
Incremental cash flow 5: -6,100
Incremental cash flow 5: 008'8-
Incremental cash flow 5: 3,400
Incremental cash flow 5: 9,500
Incremental cash flow 6: 2,700
Incremental cash flow 6: 2,750
Incremental cash flow 6: 50
Incremental cash flow 6: 3,400
Incremental cash flow 6: 650
Incremental cash flow 7: -4,000
Incremental cash flow 7: 2,750
Incremental cash flow 7: 6,750
Incremental cash flow 7: 3,400
Incremental cash flow 7: 650
Incremental cash flow 8: 2,700
Incremental cash flow 8: 2,750
Incremental cash flow 8: 50
Incremental cash flow 8: 3,400
Incremental cash flow 8: 650
Incremental cash flow 9: 2,700
Incremental cash flow 9: 2,750
Incremental cash flow 9: 50
Incremental cash flow 9: 3,400
Incremental cash flow 9: 650
Incremental cash flow 10: 2,700
Incremental cash flow 10: 2,750
Incremental cash flow 10: 50
Incremental cash flow 10: 3,400
Incremental cash flow 10: 650
Incremental cash flow 11: 12
Incremental cash flow 11: 3,000
Incremental cash flow 11: 2,900
Incremental cash flow 11: -100
Incremental cash flow 11: 4,400
Incremental cash flow 11: 1,500
Overall Incremental: 8.52%
Overall Incremental: 20.99%
Overall Incremental: 20.87%
Overall Incremental: 17.16%
Retain or eliminate Incremental: increment justified?
Alternative selected AW at MARR: 20.44%
PW at MARR: 13.72%
Alternative selected