OPTIMUM LIFE OF EQUIPMENT FOR MAXIMUM PROFIT

A GROUP OF EQUATIONS IS DEVELOPED IN THIS PAPER TO STIMULATE THE COSTS OF OWNING, MAINTAINING, AND OPERATING CONSTRUCTION EQUIPMENT. BY MANIPULATING THE VARIABLES IN THESE EQUATIONS, THE DECISION-MAKER IS ABLE TO CONFIRM QUANTITATIVELY THE DECISIONS HE MUST MAKE WHICH INVOLVE THE ECONOMIC LIFE OF HIS EQUIPMENT. THE ECONOMIC LIFE OF A PIECE OF EQUIPMENT IS DEFINED AS THAT LIFE WHICH MAXIMIZES THE RETURN TO THE OWNER DURING THE LIFE OF HIS ENTERPRISE. IN MAKING DESICIONS ABOUT EQUIPMENT POLICY, MODERN ECONOMIC ENVIRONMENT DICTATES A CONSIDERATION OF AT LEAST THE FOLLOWING BASIC CONCEPTS: (1) TIME VALUE OF MONEY; (2) TECHNOLOGICAL ADVANCES IN EQUIPMENT (OBSOLESCENCE); (3) EFFECT OF TAXES (DEPRECIATION TECHNIQUES); (4) INFLUENCE OF INFLATION; (5) INCREASED COST OF BORROWING MONEY; (6) CONTINUING REPLACEMENTS IN THE FUTURE; AND (7) INCREASED COST OF FUTURE MACHINES. ALL OF THESE CONCEPTS ARE INCLUDED IN THE MODEL WHICH IS DESCRIBED. /AUTHOR/

  • Supplemental Notes:
    • Vol 94, pp 41-54
  • Authors:
    • DOUGLAS, J
  • Publication Date: 1968-1

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Filing Info

  • Accession Number: 00201772
  • Record Type: Publication
  • Source Agency: Traffic Systems Reviews & Abstracts
  • Files: TRIS
  • Created Date: Jun 15 1970 12:00AM