Economic Lives and Planning Horizons
If the economic life of a given asset is the same as the planning horizon, no more work needs to be done for that asset. However, it's not that uncommon for the economic life of some assets to be longer or shorter than the chosen planning horizon. To fit these assets into the planning horizon, you need to do some more work depending on whether the economic life is shorter or longer than the planning horizon.
ASSETS WITH ECONOMIC LIVES LONGER THAN THE PLANNING HORIZON
When the economic life of an asset is longer than the study period, there will still be some residual value in the asset that needs to be considered. An asset that has an 8-year economic life has 2 years of residual value to consider if the planning ...
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