Multiple choice If you have reliable forecast for five years only, and you would

Question

Multiple choice

If you have reliable forecast for five years only, and you would like to evaluate two alternatives with five and six year service lives, the best method would be

Question options:

repeated lives method

study period method

either repeated lives method or study period method because both produce the same results

to choose the one with the highest FW

to chhose the one with the highest PW

repeated lives method

study period method

either repeated lives method or study period method because both produce the same results

to choose the one with the highest FW

to chhose the one with the highest PW

Explanation / Answer

If you have reliable forecast for five years only, and you would like to evaluate two alternatives with five and six year service lives, the best method would be

Answer

B. Study period method

Here we cannot apply the common multiple method (repeated lives method) because we do not have the reliable forecast for the 6th year. Therefore we have to use the study period method to evaluate the alternatives.

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