Comparison of alternatives having different useful life:

When the useful lives of mutually exclusive alternatives are
different,
(a) Repeatability assumption may be used in their comparison of
the study period can be infinite in length or a common
multiple of the useful lives.
- The economic consequence that are estimated to happen in an
alternative’s initial life span will also in all succeeding life
span (replacement).
- Actual situation in engineering practice seldom meet this
condition. This has tended to limit the use of the repeatability
assumption, except in those situation where difference between
the annual worth of the first life cycle and the annual worth
over more than one cycle of the assets involved is quite small.
(b) Coterminated assumption may be used in their comparison if
study period is finite and identical. This is the approach most
frequently used in engineering practice because product life
cycle are becoming shorter.
- To force a match of cash flow durations to the
cotermination time, adjustment are made to cash flow
estimates of the project alternatives having useful life
different from the study period.