Projects A and B are mutually exclusive. The MARR is 18%. The table below provides
the financial information for the projects:
Year
A
B
B-A
0
-$50,000
-$200,000
-$150,000
1
$30,000
$70,000
$40,000
2
$30,000
$70,000
$40,000
3
$30,000
$70,000
$40,000
4
$30,000
$70,000
$40,000
5
$30,000
$70,000
$40,000
6
$30,000
$70,000
$40,000
7
$30,000
$75,000
$45,000
ROR
57.50%
29.34%
18.93%
Using rate of return analysis, which project should be selected? Why?