Economic service life - PowerPoint PPT Presentation

Chapter 15 Replacement Decisions

Chapter 15 Replacement Decisions. Replacement Analysis Fundamentals Economic Service Life Replacement Analysis When Required Service is Long Replacement Analysis with Tax Consideration. Sunk cost : any past cost unaffected by any future decisions

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Modeling Economic Life…

Modeling Economic Life…. Total EAC = EAC of Ownership + EAC of Operation Objective is to determine the optimum number of years to own an asset that minimizes the Total EAC. This is called the Economic Service Life of the asset. Conceptually…. Over time…

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