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Investments of Unequal Lives There are times when application of the NPV rule can lead to the wrong decision. Consider a factory that must have
Investments of Unequal Lives
There are times when application of the NPV rule can lead to the wrong decision. Consider a factory that must have an air cleaner that is mandated by law. There are two choices:
The "Cadillac cleaner" costs $ today, has annual operating costs of $ and lasts years.
The "Cheapskate cleaner" costs $ today, has annual operating costs of $ and lasts years.
Assuming a discount rate, which one should we choose?How would i use npv to calculate
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