The ________ approach is used to convert the net present value of unequal-lived projects into an equivalent annual amount (in net present value terms).
A) internal rate of return
B) investment opportunities schedule
C) risk-adjusted discount rate
D) annualized net present value

Question

Quizplus · Accepted Answer

The annualized net present value approach (also known as the equivalent annual cost method) is commonly used to compare projects with unequal lifetimes by converting the net present value (NPV) of each project into an equivalent annual amount, thus providing a basis for comparison. It takes into account the initial investment, cash flows, and discount rate of each project.

The ________ Approach Is Used to Convert the Net Present