If an annual worth analysis is used to compare alternatives with different lives

Question

If an annual worth analysis is used to compare alternatives with different lives. what important assumptionis being made about the planning horizon? @ A The average life is used for the planning horizon O B. The shortest life is used for the planning horizon OThe longest life is used for the planning horizon 0 D. A least common multiple is used for the planning horizon QUESTION 7 1.000 You place 15000 into an investment plan your first year at a company. Every year after your first year you place salary increases into the account along with SS000. You expectyour salary to increase at the rate of2% pervear and the investment account makes 5% compounded yearly. You teave the company at the end of 15 years but leave the retrment account running You do not deposit anymore money into ths account if theaccount continue to make 5% per year what will be the amount in the fund after another 10 yeare? Give your answer in dollars, no symbols. ignore rents

Explanation / Answer

As per policy, only one question is allowed to answer at a time, so answering first question :

Answer 1) Answer : A. The average life is used for the planning horizon

=> This is because people have different length of life, so any average life is considered to be planning measure to access atternative uses of lives,a annual worth of a persons.

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