Replacement Decision: Getting It Right Harvard Case Solution & Analysis

Replacement of assets is one of the most important and often make decisions in business. Review of financial literature shows that the treatment of this subject is widely divergent. Moreover, the net present value model to address the most frequently described discounts only difference between the cash flows and the terminal (life) replacement value and no-no-substitute alternatives. He tacitly assumes that the risk of inflation and the factors associated with these values ​​and the same. As a result, for reasons that are illogical in particular, he may choose the wrong alternative. Through the use of case, for example, this article shows why currently popular approach is easy. In addition, it provides a model developed to overcome the problems, making money each alternative in the flow and see the final price, the assignment of the risks of inflation and discount rates for each. "Hide
by Herbert E. Kierulff Source: Business Horizons 7 pages. Publication Date: May 15, 2007. Prod. #: BH233-PDF-ENG

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