Asset Replacement Principles

Richard Perrin

American Journal of Agricultural Economics, 1972, vol. 54, issue 1, 60-67

Abstract: Using a general model of asset replacement, a replacement principle is derived which applies to both appreciating assets such as forests and depreciating assets such as equipment. The resulting replacement criterion provides a definition of opportunity costs appropriate for the replacement decision. The theory is presented graphically for the continuous time case, and two discrete-time examples are considered. Theoretical implications of changing discount rates and market forces are considered as they affect replacement policies.

Date: 1972
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:54:y:1972:i:1:p:60-67.

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