The basis of a rate of return analysis

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A plastics company is considering two injection molding processes. Process X will have a first cost of $700,000, annual costs of 300,000, and a salvage value of $150,000 after 5 years. Process Y will have a first cost of $900.000, annual costs of $300,000, and a salvage value of $280,000 after 5 years. (a) What is the rate of return on the increment of investment between the two? (b) Which process should the company select on the basis of a rate of return analysis, if the MARR is 15% per year?

Reference no: EM131162080

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