This document provides instructions for performing an incremental rate of return (ROR) analysis between two alternatives: 1. Order the alternatives by initial investment cost, with the lower-cost option labeled A and the higher-cost option labeled B. Develop the cash flow and incremental cash flow series over the common time period. 2. Draw an incremental cash flow diagram if needed. Count sign changes in the incremental cash flows to determine if multiple RORs are possible. 3. Set up the present worth equation for the incremental cash flows and use trial and error to determine the incremental rate of return, Δi*B-A. Select the alternative with the higher ROR if it exceeds the minimum acceptable rate of return