Incremental Analysis

1
Incremental Analysis
2
Incremental Investment Amount
(The ROR on this column determines which
alternative to select)
3
Alternative Selection by ROR
4
Next, find ROR on incremental CF and compare to
MARR
0 -20,000 6000(P/A,i,5) 2000(P/F,i,5)
i 17.2 gt MARR of 15
20,000 investment is attractive Select Alt B
5
Multiple Alternatives
Next, compare first two alts incrementally
Then, eliminate one and compare survivor w/ next
alt
Finally, continue comparing alts until only 1
remains