Question

When an incremental rate of return analysis is conducted correctly, the alternative identified as best by the present worth method will also be identified as best by the incremental ROR analysis.

a. True
b. False

Answer 1

True.

Explanation:

When an incremental rate of return analysis is conducted correctly, the alternative identified as best by the present worth method will also be identified as best by the incremental ROR analysis. When more than one alternative can be selected from those available, the alternatives are said to be mutually exclusive.