Assume in Analyzing Alternative Proposals That Proposal F Has a Useful

question 81

Multiple Choice

Assume in analyzing alternative proposals that Proposal F has a useful life of six years and Proposal J has a useful life of nine years.What is one widely used method that makes the proposals comparable?

• A) Adjust the life of Proposal F to a time period that is equal to that of Proposal J and add its estimated residual value to the cash inflow at the end of year nine.
• B) Adjust the life of Proposal J to a time period that is equal to that of Proposal F and add its estimated residual value to the cash inflow at the end of year six.
• C) Adjust the life of Proposal F and Proposal J to a time period equal to the average of six and nine years (7.5 years) and add its estimated residual value to the cash inflow at the end of operating life.
• D) Adjust the life of Proposal J to a time period that is equal to that of Proposal F and deduct last three years cash inflow of Proposal J from its total cash inflow.