The best way to measure projects with unequal lives is ____.
A) the Gordon Model
B) the payback period
C) the net present value method
D) equivalent annual annuity approach

Question

Quizplus · Accepted Answer

The equivalent annual annuity approach is the best way to measure projects with unequal lives. This approach converts the cash flows of each project into an equivalent annuity payment that would provide the same value over a set number of years. This allows for a more accurate comparison between projects with different lifetimes. The Gordon model is used to value stocks, the payback period only considers the time it takes to recover initial investment, and the net present value method does not take into account unequal project lives.

The Best Way to Measure Projects with Unequal Lives Is