Assume in Analyzing Alternative Proposals That Proposal F Has a Useful

question 116

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) Ignore the fact that Proposal F has a useful life of six years and treat it as if it has a useful life of nine years.
• B) Adjust the life of Proposal J to a time period that is equal to that of Proposal F by estimating a residual value at the end of year six.
• C) Ignore the useful lives of six and nine years and find an average (7 1/2 years).
• D) Ignore the useful lives of six and nine years and compute the average rate of return.

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