Which of the Following Best Describes the Appropriate Way to Evaluate

question 92

Multiple Choice

Which of the following best describes the appropriate way to evaluate mutually exclusive projects with unequal lives?

• A)NPV is the appropriate method because NPV is always the method of choice.
• B)IRR is the appropriate method because IRR adjusts for the fact that the projects are not of the same length.
• C)Replacement chain is the appropriate method because it equalizes the length of the unequal projects.
• D)Equivalent annual annuity is the appropriate method because it adjusts for the fact that the projects are not of the same length.
• E)Both c. and d. are correct.