Comment
In step 4, the presence of up to three i * values is indicated. The preceding analysis fi nds one of
the roots at 12.65%. When we state that the incremental ROR is 12.65%, we assume that any
positive net cash fl ows are reinvested at 12.65%. If this is not a reasonable assumption, the
ROIC or modifi ed ROR technique (Section 7.5) must be applied to fi nd a different single i'
or i'' to compare with MARR 12%.
The other two roots are very large positive and negative numbers, as the IRR function of
Excel reveals. So they are not useful to the analysis.