Machine-translated by Google. Questions are authored in English.
Top

Discussion

Comparing two options of unequal life is best done on

  • A.net present value over the shorter life
  • B.simple payback period
  • C.initial capital cost
  • D.equivalent annual cost

Answer: D

A ten-year option and a twenty-five-year option cannot be compared on a present value taken over different horizons, whereas annualising both puts them on one footing. The alternative is to compare present values over a common multiple of the two lives.

No comment is present. Be the first to comment.
Loading…

Post your comment

Please log in or register to post a comment.