When considering mutually exclusive investment projects with different lives that will be replaced once they terminate, it is best to evaluate them using _________________________.

Question

Quizplus · Accepted Answer

When comparing mutually exclusive investment projects with different lives, it's best to use the equivalent annual cost rule. This rule converts the net present value of each project into an equivalent annual cost, making it easier to compare the projects. The other rules listed, such as the net present value rule and internal rate of return rule, assume that the projects have the same life or can be repeated indefinitely, which is not the case with mutually exclusive projects.

When Considering Mutually Exclusive Investment Projects with Different Lives That