Example: with the use of equipment, the annual depreciation is getting less and less, operating costs are getting bigger and bigger, set the equipment to use x years
(10,000-1,000)/x=600+180x;
5x=5 when the fifth year of depreciation + operating costs = (10,000-1,000)/5+600+180*5=3300;
x=6, the sixth year depreciation + operating costs = (10000-1000)/6 + 600 + 180 * 6 = 3180;
So the economic life of the equipment is 6.
Economic life of the equipment refers to the equipment from the beginning of the use (or inactivity) to the equipment from the beginning of use (or inactivity) to the equipment due to suffer tangible wear and tear and intangible wear and tear (depreciation) and then continue to use the equipment in the economy has been unreasonable Location of all the time, that is, from the date of equipment installed in a new state and put into use, to the lowest total annual life cost of the year and forced to withdraw from the original service function until the time. Equipment replacement generally depends on the economic life of the equipment. The economic life of equipment can be determined as long as the average cost of using the equipment is minimized.
The methods of determining the economic life of equipment are static and dynamic models.
1, static mode
Annual average cost of use CN = (P-LN)/N +1/N × ∑Ct where CNN annual average cost of use of the equipment, P for the actual value of the equipment, Ct for the t year of the equipment operating costs, LN for the end of the N year of the net residual value of the equipment. (P-LN)/N is the average annual asset consumption cost of the equipment and 1/N x ∑Ct is the average annual operating cost of the equipment.
Because the longer the equipment is used, the more the tangible and intangible wear and tear of the equipment intensifies, which leads to an increase in the maintenance cost of the equipment, and this yearly incremental cost ΔCt is called the low deterioration of the equipment. With the low deterioration of the value of the equipment loss method is called the low deterioration value method.
Economic life of the equipment N0 = √2 (P - LN) / λλ for the low deterioration value of the equipment.
2, dynamic model
Equipment economic life is to consider the time value of money in the case of calculating the net annual value of the equipment NAV or annual cost AC, by comparing the average annual benefit or average annual cost to determine the economic life of the equipment N0. Determination of the method.
Estimating the economic life of the equipment with the net annual value, find the minimum value of the average annual cost NAVmin (when the project is considered to be expenditure-based) or the maximum value of the average annual profit AVmax (when the project is considered to be revenue-based) and its corresponding years, so as to determine the economic life of the equipment .