Least Common Multiple? When do we use it in real life?

CFA Level II Corporate Finance
#1

Hi All

I would like to know when exactly do we use the LCM of lives approach in choosing two mutually exclusive projects? Why can we not simply use NPV and make a decision?

Thanks

#2

As they’ll give you the same answer, you can use either with impugnity; in real life, the LCM of lives approach makes most sense when you have to replace something frequently (e.g., tires on your car).

When I read the title I thought you simply wanted to know a real-life application for LTM. That’s easy: buying hot dogs and hot dog buns (when they’re sold in packages of different quantities, and you want one bun for each hot dog.)