Optimal Replacement under Risk

Oscar R. Burt

American Journal of Agricultural Economics, 1965, vol. 47, issue 2, 324-346

Abstract: Large investments in capital goods create concern about economic life of specific items of capital such as farm buildings, machinery, and livestock. Many of these assets are subject to involuntary replacement due to random phenomena. This paper develops a model for economic analysis of asset life under conditions of chance failure or loss. Analytical results are derived which imply routine decision rules and provide insight to the economics of replacement.

Date: 1965
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:47:y:1965:i:2:p:324-346.

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