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The chief practical advantage of annual worth over present worth is that annual worth

  • A.needs no common study period for unequal lives
  • B.requires no interest rate to be assumed
  • C.is unaffected by the salvage value
  • D.gives a different decision from present worth

Answer: A

Correct answer: needs no common study period for unequal lives

Because annual worth is already expressed per period, an alternative living four years and one living six can be compared directly - provided each is assumed to repeat at its own life, which is precisely the assumption the least common multiple makes explicit. It is the same assumption, arrived at with less arithmetic.

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