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Welcome to the 2017 AFS Annual Meeing, being held this year, in conjunction with FPA in Nashville!
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Sunday, October 1 • 8:00am - 8:50am
A1b Disassembling the Replacement Analysis in Capital Budgeting: A Teaching Note [CFP Pedagogy]

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When teaching capital budgeting, specifically the analysis with regard to replacement projects, there comes a point when the instructor has to explain why the market value of the old machine is recognized, as is the continued depreciation on the old machine.  Typically, the response is, “Well we want to capture the true effect of replacing the old machine and its true impact.”  This paper disassembles the analysis into the sale of the old machine and the purchase of the new project separately to help clarify the process to students.

Author(s): Cris de la Torre, Ph.D., Amber Lemmon

avatar for Cris de la Torre, Ph.D.

Cris de la Torre, Ph.D.

Professor of Finance, University of Northern Colorado

Sunday October 1, 2017 8:00am - 8:50am
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