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Optimum Useful Life and Optimum Replacement Time

In: Investment Valuation and Appraisal

Author

Listed:
  • Kay Poggensee

    (University of Applied Sciences)

  • Jannis Poggensee

Abstract

After you have already become acquainted with the basics of investment calculation in the previous chapters in the form of terminology, static investment calculation methods, dynamic investment calculation methods as well as selection and programme problems, the aim of this chapter is to present the economic optimisation of the useful life, which has so far been considered an exogenous variable, and to let you determine the economic useful life under various aspects. As a result of this chapter you: Know the optimisation of the useful life as an economic problem. Know the assumptions used in the calculation of useful life. Can make the various case distinctions in the useful life calculation. Know the mathematical determination path of the procedures for calculating the useful life. Know the decision criteria of the procedures. Are able to apply the procedures for useful life optimisation to practical cases. Are able to interpret the results of the useful life calculation. Are able to apply the possibilities of determining the optimum useful life by calculation to your practical operational investment problems in an appropriate manner. Are able to use the results of the useful life calculation appropriately for your practical operational decision-making problems. In order to achieve these goals, it is necessary to follow the offered exercise calculations independently with the pocket calculator or spreadsheet. Enjoy your work!

Suggested Citation

  • Kay Poggensee & Jannis Poggensee, 2021. "Optimum Useful Life and Optimum Replacement Time," Springer Texts in Business and Economics, in: Investment Valuation and Appraisal, chapter 5, pages 203-238, Springer.
    • Handle: RePEc:spr:sptchp:978-3-030-62440-8_5
    DOI: 10.1007/978-3-030-62440-8_5
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