Planning Horizons
To compare different proposals consistently, they all need to have the same time span. The consistent time span for comparing a set of proposals is called the planning horizon (sometimes known as the study period, or n*). The planning horizon can be based on the following:
Company policy
How far into the future you can make reasonable estimates
The economic life of the shortest-lived asset
The economic life of the longest-lived asset
The best judgment of the person performing the decision analysis
Whatever the planning horizon ends up being, the economic lives of the assets within a proposal need to be compared with that time period.
Software itself isn't usually considered to be an asset. However, it's not unusual for software ...
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