Engineering Economy, 5/e

Leland Blank, Texas A&M University
Anthony Tarquin, University of Texas - El Paso

Rate of Return Analysis: Multiple Alternatives

Learning Objectives

Purpose: Select the best mutually exclusive alternative on the basis of rate of return analysis of incremental cash flows.

This chapter will help you:

State why an incremental analysis is necessary for comparing alternatives by the ROR method.

Prepare a tabulation of incremental cash flows for two alternatives.

Interpret the meaning of ROR on the incremental initial investment.

Select the better of two alternatives using incremental or breakeven ROR analysis based on present worth.

Select the better of two alternatives using a ROR analysis based on annual worth.

Select the best of multiple alternatives using an incremental ROR analysis.

Develop spreadsheets that include PW, AW, and ROR evaluation for multiple, different-life alternatives.

2002 McGraw-Hill Higher Education
Any use is subject to the Terms of Use and Privacy Policy.
McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies.