The annual worth method is preferred over the present worth method if a) alterna

Question

The annual worth method is preferred over the present worth method if

a) alternatives' benefits cannot be defined

b) service lives of possible alternatives vary

c) all alternatives have the same service life

d) the service lives of alternatives cannot be specified

e) initial investment or first cost cannot be defined for one or more alternatives

a) alternatives' benefits cannot be defined

b) service lives of possible alternatives vary

c) all alternatives have the same service life

d) the service lives of alternatives cannot be specified

e) initial investment or first cost cannot be defined for one or more alternatives

Explanation / Answer

Solution: all alternatives have the same service life

Explanation: When all alternatives have the same service life AW method is preferred over PW method. AW deals with one life cycle of an alternative and provide benefits for comparing diferent alternatives

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