Which of the following techniques should be applied to a Equivalent Annual Unifo

Question

Which of the following techniques should be applied to a Equivalent Annual Uniform Worth (EUAW) analysis of multiple alternatives when their lifetimes are not the same?

A. Find a common multiple of the lifetimes and consider the replacement equipment costs and salvage as needed for each alternative

B. Make the analysis based on a single lifetime for each alternative

C. Use an incremental analysis between the difference of the lifetimes

D. Use an analysis period for the shorter lifetime for both alternatives.

Explanation / Answer

B. Make the analysis based on a single lifetime for each alternative.

It is a good idea to find the present worth of each and then find the annual equivalent.

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