When you have to choose between projects with different lives,you should put them on an equal footing by computing the equivalent annual annuity or benefit of the two projects.

Question

Quizplus · Accepted Answer

Computing equivalent annual annuity or benefit is a way to put projects with different lives on an equal footing, as it allows for a direct comparison of the cash flows of each project over a given time frame. By calculating the equivalent annual annuity, you can determine which project will provide the same level of annual benefit or return, allowing you to choose the project with the highest equivalent annual annuity.

When You Have to Choose Between Projects with Different Lives,you