A capital investment's expected useful life is inversely correlated with the uncertainty of its cash flows.

Question

Quizplus · Accepted Answer

The expected useful life of a capital investment is related to the physical or functional use of the asset over time, not directly to the uncertainty of its cash flows. Uncertainty of cash flows is more closely related to market conditions, demand, and other external factors rather than the asset's useful life.

A Capital Investment's Expected Useful Life Is Inversely Correlated with the Uncertainty