Answer to Question #275420 in Civil and Environmental Engineering for Hshshn

Question

State two assumptions made when doing capital rationing using a PW analysis for unequal-life

projects.

Answer 1

Two assumptions are:

 (1) The funds invested in every project will remain invested for the period of the longest lived project, and

(2)

 Reinvestment of any positive net cash flows is assumed to be at the MARR from the time they are realized until the end of the longest-lived project.