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11 n an incremental investment rate of return analysis of multiple mutually exclusive alternatives that have different lives, the incremental investment cash flow must extend through: A)The life of the longer of the two alternatives under consideration B)The least common multiple of the lives of the two alternatives under consideration C) The longest life of all of the alternatives under consideration D) The least common multiple of the lives of all of the alternatives under consideration 12 Alternative A has a first cost of $10,000, an annual operating cost of $5,000 and a salvage value of $2,000. Alternative B has an initial cost of $25,000, an annual operating cost of $1,000 and a salvage value of $12,000. If both alternatives have a five-year life, the equation that will yield the rate of return on the incremental investment is: A) 0--$15,000 . 4,000(P/A,i,5) + 10,000(P/F,i,5) B) 0 _$15,000 + 4,000(P/A,i,5) . 10,000(P/F,i,5) C) 0-.$15,000 + 4,000(P/A,i,5) + 12,000(P/F i,5) D 0$15,000 4,000 (P/A,i,5) 10,000 (P/F,i,5) 13 Alternative X has a first cost of $5 million and an annual maintenance cost of $200,000 Alternative Y has a first cost of $7 million, a maintenance cost of $40,000 and periodic expenditures of $100,000 every five years. If both alternatives have infinite lives, the equation that will yield the rate of return on the incremental investment is: A) 0 -$2 million + 160,000/1 + 100,000(P/F,i,5) B) 0$2 million160,000/i 100,000(A/F,i,5)/i C) 0 $2 million160,000/i - 100,000(A/F,i, )/i D) 0$2 million160,000/i 100,000(A/F,i,5) Questions 14 through 16 are based on the following information: Alternative ,In. Inv.$, Alternative Rat %, % Inc. Rate Of Return in % when Com. with A B C 40,000 29 75,000 15

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