The Advantage(s) of the Equivalent Annual Annuity Method Over the Replacement

question 9

Multiple Choice

The advantage(s) of the equivalent annual annuity method over the replacement chain technique in evaluating mutually exclusive investments having unequal lives include

• A)the equivalent annual annuity method is often computationally simpler
• B)the equivalent annual annuity method simplifies the handling of the time discrepancies that frequently arise in the replacement chain method
• C)the equivalent annual annuity method is theoretically superior
• D)a and b only

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