Question

ignoring differences in the useful lives of investments when evaluating capital expenditure alternatives can distort present value analysis.

Answer 1

Yes, it does.

Step-by-step explanation:

It definitely impacts the present value analysis. If we are evaluating two proposals and we ignore the useful lives of the investments, then

• The present values of the investment proposals will be inaccurate.
• The cash flows might be inaccurate.
• The discount factor to be used will also be inaccurate.
• The overall results will be misleading.
• The tax credits and balancing allowances and charges will also be inaccurate.