When choosing the best mutually exclusive investment you select the investment with the lowest annuity equivalent is true.
While we calculate the annuity equivalent, it is first-rate to apply a nominal cut-price fee. The annuity equal approach gives the yearly annuity over the financial lifestyles of the investment that outcomes in a gift value equal to the prevailing cost of its projected coins float circulate of the funding.
Investments with one-of-a-kind economic lives can be in comparison within the present fee terms by making use of the least common denominator of time technique. Whilst selecting great funding while the usage of credit rationing it is important to rank the investments and the usage of the annuity equivalent from maximum to lowest.
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