You Are Evaluating Two Projects with Unequal Lives

question 62

Multiple Choice

You are evaluating two projects with unequal lives. Purchase of a high-quality machine will result in positive cash flows for nine years, while purchase of a medium-quality machine will result in positive cash flows for six years. At the end of each respective time period, the machine is expected to be worthless. How many times will the medium-quality machine project have to be linked in order to come up with a common time period?

• A)Twice
• B)Three times
• C)Four times
• D)Nine times

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Definitions:

Fuel Efficiency

An indicator of a vehicle's fuel efficiency, typically measured in miles per gallon (mpg) or liters per 100 kilometers (l/100km).

Gallons Per Mile

A measure of fuel efficiency or consumption, expressing the number of gallons of fuel used per mile traveled.

Scatterplot

A kind of graph using Cartesian coordinates that represents data points for usually two variables.

Re-expression

The process of transforming data using mathematical operations to make it easier to model or interpret.