When we compare assets with different lives,we should select the machine that has the lowest equivalent annual cost.

Question

Quizplus · Accepted Answer

When comparing assets with different lives, the equivalent annual cost is used to make a fair comparison. This takes into account the initial cost of the asset, its lifespan, and expected maintenance costs. By selecting the machine with the lowest equivalent annual cost, we can ensure that we are getting the most cost-effective option in the long run.

When We Compare Assets with Different Lives,we Should Select the Machine