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Each of the following 8 independent projects has a 10-year life and no salvage v

ID: 1119867 • Letter: E

Question

Each of the following 8 independent projects has a 10-year life and no salvage value.

Project

Cost ´ $1,000

UAB ´ $1,000

Computed RoR

A

($50)

$12.63

21.72%

B

($200)

$32.24

9.78%

C

($175)

$30.47

11.60%

D

($50)

$7.14

7.06%

E

($75)

$13.91

13.16%

F

($100)

$17.97

12.37%

G

($25)

$5.81

19.24%

H

($100)

$13.85

6.41%

Your company has $200k capital available to invest and a 12% MARR. Based on rate of return analysis, which projects should you invest in?

A. A & F

B. A, C, E, G

C. A, E, & G

D. A, E, F, & G

Project

Cost ´ $1,000

UAB ´ $1,000

Computed RoR

A

($50)

$12.63

21.72%

B

($200)

$32.24

9.78%

C

($175)

$30.47

11.60%

D

($50)

$7.14

7.06%

E

($75)

$13.91

13.16%

F

($100)

$17.97

12.37%

G

($25)

$5.81

19.24%

H

($100)

$13.85

6.41%

Explanation / Answer

Answer
Option D
the MARR is minimum ROR required to invest in the project and the ROR above 12% is for projects A,E,F,G
so we select these projects

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