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Chapter 8 - Incremental Rate of Return Analysis: EGR 403 Capital Allocation Theory
Chapter 8 - Incremental Rate of Return Analysis: EGR 403 Capital Allocation Theory
A B C D E
Cost 4000 2000 6000 1000 9000
EUAB (A) 639 410 761 117 785
PWB 7330 4700 8730 1340 9000
IRR 15% 20% 11% 10% 6%
P/A 6.26 4.88 7.88 8.55 11.47
D B A C E
Cost 1000 2000 4000 6000 9000
EUAB (A) 117 410 639 761 785
25
Present Worth of Benefit
0.06
20
15
0 $26.42
0 $26.42
10
NEGATIVE NPW
0
0 5 10 15 20 25 30
Present Worth of Cost