In the case of unequal-lived, mutually exclusive projects, the use of net present value to select the better project could result in an incorrect decision.

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This is because the net present value method does not consider the timing and duration of cash flows. A shorter-lived project may have a higher net present value, but a longer-lived project may ultimately generate more total value. Other methods, such as the equivalent annual annuity, may be more appropriate in these cases.

In the Case of Unequal-Lived, Mutually Exclusive Projects, the Use