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Equivalent uniform annual cost is used in preference to annual worth when the alternatives

  • A.have equal lives
  • B.have no salvage value
  • C.differ only in their costs
  • D.differ only in their revenues

Answer: C

Correct answer: differ only in their costs

Where the alternatives provide the same service, revenues are identical and cancel out of the comparison, leaving only costs. It is then clearer to work with equivalent uniform annual cost, in which the better alternative is the smaller figure, than with an annual worth that would be negative for both.

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