WebThere are two ways to correct for projects with unequal lives when using the NPV approach. Which of the answers below is one of these ways? One way is to find a common life by extending the projects to the least common multiple of their lives. One way is to compare the lengths of the projects and take the project with the shortest life. WebMutually Exclusive Capital Projects with Unequal Lives It is possible for a firm to face a scenario where multiple capital projects show a positive net present value, but only enough resources are available to fund one of them. In this situation, the projects are considered to be mutually exclusive.

Comparing projects with unequal lives by Ralph Lionel …

WebWhen comes to unequal-lived and mutually exclusively projects, the annualized net present value is used as a decision rule for the project investment appraisal or capital budgeting decision or techniques. This is one of the capital budgeting refinements that we commonly encounter and use for the investment appraisal. WebThe Least Common Multiple of Lives approach is a method to evaluate capital projects that are mutually exclusive and that have unequal lives. Another method to evaluate capital projects with unequal lives is the equivalent annual annuity (EEA) approach. On this page, we discuss the least common multiple of lives approach. rite aid north bend oregon

13. The replacement chain approach - Evaluating Chegg.com

WebC. different rankings of projects with unequal lives.D. the same rankings of projects with different required investments. A. the same decision ( accept or reject ) for any single investment . 20.The net present value (NPV) model can be used to evaluate and rank two or more proposed projects. WebMar 6, 2024 · The unequal life issue (1) does not arise for independent projects, but (2) it can arise if mutually exclusive projects with significantly different lives are being … rite aid north canton