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Comparing projects of different lives

Two mutually exclusive machines can be replaced like-for-like forever. Machine A has NPV ₹10,000 over 3 years; machine B has NPV ₹15,000 over 6 years. The cost of capital is 10% (annuity factors: 3 years 2.487, 6 years 4.355). Which is better?

A.B, because its total NPV is ₹5,000 higherB.B, with an equivalent annual value of about ₹4,355C.A, with an equivalent annual value of about ₹4,021D.They are equal once lives are considered

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Comparing projects of different lives

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