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Comparing the least common multiple approach with a defined study period, the study period

  • A.always favours the longer-lived alternative
  • B.removes the need to value unused service life
  • C.avoids assuming an identical replacement far ahead
  • D.avoids the need for any interest rate

Answer: C

Truncating at a chosen horizon is more honest about an uncertain future, at the cost of having to estimate a market value for whatever life remains. That estimate is itself a judgement, so neither approach is free of assumption.

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