What is the Common Life Approach in Cash Flow Analysis?

1 FINANCE MCQS

In cash flow analysis, two projects are compared using a common life approach, which is classified as ____________?

Transaction approach
Replacement chain approach
Common life approach
Both B and C

Correct Answer: D. Both B and C

Detailed Explanation

When two projects with different lifespans are compared on a common life basis, the method is known as the Replacement Chain Approach. Since both terms refer to the same concept, the correct choice is Both B and C.

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In cash flow analysis, two projects are compared using a common life approach, which is classified as ____________?

In cash flow analysis, two projects are compared using a common life approach, which is classified as ____________?

Detailed Explanation

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