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The least common multiple approach to unequal lives assumes each alternative is

  • A.abandoned at the end of the shorter life
  • B.extended by increasing its salvage value
  • C.compared on its own life without adjustment
  • D.repeated until the horizons coincide

Answer: D

Correct answer: repeated until the horizons coincide

If one alternative lasts four years and another six, both are assumed to be replaced by themselves until they reach twelve, and the whole twelve years is discounted. The assumption is that identical replacement will be available at the same cost - which is what makes the method sound or unsound depending on the case.

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