The outcomes of the incremental investment analysis for the comparison of cost alternatives as presented in Table 2.3 are briefly described below.

• Comparison between alternatives A2 (base alternative) and A4 (next higher capital investment alternative). The obtained rate of return form the incremental investment analysis is 24.06% which is greater than MARR (20%). Alternative-2 (A2) is eliminated from further analysis and alternative-4 (A4) is the new base alternative.
  
• Now comparison between alternatives A4 and A1 (next higher capital investment alternative). The obtained rate of return form the incremental investment is 28.65% and is greater than MARR. Thus alternative-4 (A4) is eliminated from further analysis and alternative-1 (A1) is the new base alternative.
  
• Finally comparison between alternatives A1 and A3 (next higher capital investment alternative). The rate of return obtained from the incremental investment analysis is 14.09% which is less than MARR (20%). Thus the incremental investment associated with alternative-3 (A3) i.e. largest capital investment alternative is not justified and hence alternative-1 (A1) is selected as the best alternative, as no other alternative is left for comparison. In addition, the present worth of the incremental investment associated with alternative-1 (A1) over alternative-4 (A4) at MARR i.e. 20% is greater than zero i.e. Rs.132978>0.

• It can be seen here that, the largest capital investment alternative (A3) is not selected because the incremental investment associated with it results in a rate of return which is less than MARR. In addition the present worth of the incremental investment associated with alternative-3 (A3) over alternative-1 (A1) at MARR i.e. 20% is less than zero i.e. –Rs.66150<0.

Now the values of equivalent present worth of the total cash flow of the cost alternatives at MARR (20%) are found to be -Rs.11280643, -Rs.11165528, -Rs.11098700 and -Rs.11032550 for alternatives A2, A4, A3 and A1 respectively. Thus alternative A1 (the best alternative) exhibits lowest negative equivalent present worth as compared to other cost alternatives.