For which situation below would one need to "smooth out" the variation in each set of cash flows so that each becomes a perpetuity?

Question

Quizplus · Accepted Answer

Smoothing out the variations in cash flows is necessary when choosing between alternative assets with differing lives. This allows for a fair comparison of the assets on a perpetuity basis, which is important when evaluating long-term investments. Choosing between projects with differing risks or independent projects does not require smoothing out cash flow variations, and choosing between alternative assets with equal lives would not require it either, as the cash flows could be directly compared.

For Which Situation Below Would One Need to "Smooth Out