کد مقاله | کد نشریه | سال انتشار | مقاله انگلیسی | نسخه تمام متن |
---|---|---|---|---|
1014645 | 939390 | 2007 | 7 صفحه PDF | دانلود رایگان |
![عکس صفحه اول مقاله: The replacement decision: Getting it right The replacement decision: Getting it right](/preview/png/1014645.png)
Replacing assets is one of the most important and frequently made decisions in business. A review of the finance literature shows that treatment of this subject diverges widely. More importantly, the net present value decision model most often described discounts only the differences between cash flows and terminal (salvage) values of the replace and do-not-replace alternatives. It tacitly assumes that the risk and inflation factors associated with these values are the same. As a result, for reasons that are counterintuitive in part, it may select the wrong alternative. Through use of a case example, this article demonstrates why the currently popular approach presents difficulties. Further, it provides a model designed to overcome the problems by making each alternative's cash flow and terminal value visible, and assigning appropriate risk and inflation discount factors to each.
Journal: Business Horizons - Volume 50, Issue 3, May–June 2007, Pages 231–237