If it is said that the economic life of a challenger is four years it means that
A)the payback period is four years.
B)four years are required for the challenger to recover its initial investment.
C)four years are required for the challenger to recover its operating and maintenance costs.
D)the equivalent annual cost in year four is at its minimum.
E)the equivalent annual cost is decreasing over four years.

Question

Quizplus · Accepted Answer

The economic life of an asset is the period over which the equivalent annual cost is minimized, indicating that in year four, the equivalent annual cost is at its minimum.

If It Is Said That the Economic Life of a Challenger