THE INFLUENCE OF INVESTMENT CREDIT ON THE ECONOMIC LIFE OF CONSTRUCTION EQUIPMENT

A STUDY WAS CONDUCTED TO DETERMINE THE INFLUENCE OF THE INVESTMENT TAX CREDIT ON THE ECONOMIC LIFE OF CONSTRUCTION EQUIPMENT. ANALYSIS OF EQUIPMENT LIFE FALLS INTO THREE CATEGORIES: (1) ECONOMIC LIFE TOO SHORT TO BE INFLUENCED BY INVESTMENT CREDIT, (2) ECONOMIC LIFE OF FOUR TO EIGHT YEARS, WHERE THE INVESTMENT CREDIT INFLUENCES THE OPTIMUM LIFE OF THE EQUIPMENT, AND (3) WHEN EQUIPMENT LIFE IS SO LONG THAT INVESTMENT CREDIT HAS NO APPRECIABLE EFFECT ON THE OPTIMUM LIFE, BUT MAY AFFECT THE PROFITS. SOME ANALYTICAL EXPRESSIONS WERE DEVELOPED BY WHICH TO COMPUTE INVESTMENT CREDIT AND INCLUDE THEM IN THE MATHEMATICAL MODEL THAT DETERMINES THE ECONOMICAL LIFE OF THE EQUIPMENT. THE EQUATIONS ARE APPLIED TO A REAL-LIFE CASE BY USING A COMPUTER PROGRAM. THIS STUDY WAS CONCERNED WITH A PARTICULAR TYPE OF EQUIPMENT, TRANSMIXERS, BUT IT SHOWS A CONSTRUCTION EQUIPMENT OWNERS SHOULD BE AWARE OF THE TRUE EFFECTS OF INVESTMENT CREDIT. IN THE PAST, IT HAS LED THEM TO DELAY REPLACEMENT IN ORDER TO RECEIVE THE CREDIT. THIS POLICY MAY NOT ALWAYS RESULT IN INCREASED PROFITS. THEREFORE, A CAREFUL ANALYSIS USING THE MODEL DESCRIBED SHOULD BE MADE BEFORE DECIDING TO DELAY REPLACEMENT IN ORDER TO OBTAIN INVESTMENT CREDIT.

  • Supplemental Notes:
    • Tech Rept NO 85, 48 PP, 6 FIG, 12 TAB, 11 REF, 3 APP
  • Corporate Authors:

    Stanford University

    Department of Civil Engineering
    Stanford, CA  USA  94305
  • Authors:
    • Herrero-a, C
  • Publication Date: 1967-11

Subject/Index Terms

Filing Info

  • Accession Number: 00215261
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Aug 3 1970 12:00AM