After-tax equipment replacement analysis with technology change

This thesis contends that equipment replacement analysis should consider the implications of technological change since a like for like replacement is unrealistic with the current state of technological change. The major effects of improvements are a decrease in salvage value and opportunity expense of not implementing the latest innovations. The improvements appear as gradual changes and as major breakthroughs. Technological forecasting may be accomplished by several different methods including the Delphi method, analogy, and trend interpolation. A discussion of these methods and sources of information are given. The replacement model uses a future worth analysis, continuous discounting, discrete cash flows, a range of planning horizons, and incorporation of tax effects. The model was implemented using a BASIC program with graphics capability. The inputs are current year, initial cost of the equipment, the first years operating cost, regular tax rate, capital gains tax rate, depreciable life (as defined by the ERTA), rates of gradual change, number, dates and effect of major breakthroughs. A discussion of the sensitivity of the model to the various inputs is also given.

Name thesis:degree_name

Master of Science

Level thesis:degree_level

masters

Discipline thesis:degree_discipline

Industrial Engineering and Operations Research

Department dc:contributor.department

Industrial Engineering and Operations Research

Grantor dc:publisher

Virginia Polytechnic Institute and State University

Year dc:date.issued

1982

Author dc:creator

• Jones, Marilyn Smith

Statement dc:rights

• In Copyright

Licence dc:rights.uri

• http://rightsstatements.org/vocab/InC/1.0/

Language dc:language.iso

en_US

Handle dc:identifier.uri

http://hdl.handle.net/10919/87212

OAI identifier oai:identifier

oai:vtechworks.lib.vt.edu:10919/87212