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The least common multiple approach is questionable when

  • A.technology or costs will have changed before the repetition
  • B.the two lives are equal
  • C.the discount rate is high
  • D.the salvage values are zero for both alternatives

Answer: A

Correct answer: technology or costs will have changed before the repetition

The method rests on identical replacement, so it fails wherever that is implausible: fast-moving equipment, a changing cost base, or a service that will not be needed at the end. In such cases a defined study period with estimated market values is the honest treatment.

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