Age

Machine Age

K
4

4
K

Cost (C)

30,000.00
25,000.00
20,000.00
14,000.00
8,000.00
4,000.00
1,000.00

Revenue (R)

Salvage (S)

200.00
300.00
400.00
550.00
650.00
750.00
900.00

80,000.00
60,000.00
40,000.00
30,000.00
20,000.00
10,000.00

R
K
R

KEEP

2
R
K

Stage

X
R(t)

1
R

-C(t)

Value

S(t)

R(0)

-C(0)

S(1)/S(O
pt)

-I

Value

OPTIMUM
(Opt)

0
0

Decision Year
Verification:

25000

60000

300

84,700

80000

30000

200

80000

110000

79,800

84,700

20000

40000

400

59,600

60000

30000

200

80000

110000

59,800

59,800

14000

30000

550

43,450

40000

30000

200

80000

110000

39,800

43,450

10000

30000

200

80000

110000

9,800

9,800

25000

59800

300

84,500

80000

30000

200

84700

110000

84,500

84,500

R,K

20000

43450

400

63,050

60000

30000

200

84700

110000

64,500

64,500

4000

9800

750

13,050

20000

30000

200

84700

110000

24,500

24,500

40000

-200 30000

t=1 K

25000

-200

t=2 R

60000

-300 30000

t=1 K

25000

-300

-110000

-40200

25000

64500

300

89,200

80000

30000

200

84500

110000

84,300

89,200

8000

24500

650

31,850

30000

30000

200

84500

110000

34,300

34,300

14000

34300

550

47,750

40000

30000

200

89200

110000

49,000

49,000

t=3 R

-110000

I= 110000

-20300

24800

24700

-11000
Salvage of next year +Calculated Value
KEEP

DECISION
t=3

DECISION

S(t+1)/S(
Opt+1)

REPALCE

t=1

t=2

t=1