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7nadin3 [17]
3 years ago
8

ignoring differences in the useful lives of investments when evaluating capital expenditure alternatives can distort present val

ue analysis.
Business
1 answer:
vodka [1.7K]3 years ago
6 0

Answer:

Yes, it does.

Explanation:

It definitely impacts the present value analysis. If we are evaluating two proposals and we ignore the useful lives of the investments, then

  • The present values of the investment proposals will be inaccurate.
  • The cash flows might be inaccurate.
  • The discount factor to be used will also be inaccurate.
  • The overall results will be misleading.
  • The tax credits and balancing allowances and charges will also be inaccurate.
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