Question 1

Consider the two mutually exclusive projects described in the table below. (Note: Each part of the question requires a

written answer.)

a) Assuming 9% minimum attractive rate of return (MARR), should either of the two projects be accepted?

Why?

b) Assuming 16% MARR, should either of the two projects be accepted? Why?

c) For any positive value of the MARR, divide the possible MARR values into ranges with different decisions;

describe and discuss what decision would be made in each range and why. You will need to calculate the

crossover rate to determine the precise MARR where the decision changes. Include an NPV profile table and

chart to illustrate your answer.