Investment cost 65,000

Residual value Maintenance cost

Years of service
Year 1 85% 1,200 1
Year 2 75% 1,800 2
Year 3 67% 2,500 3
Year 4 62% 3,100 4
Year 5 60% 3,800 5
Year 6 55% 4,700 6
Year 7 50% 5,700 7
Year 8 45% 6,800 8
Year 9 35% 7,900 9
Year 10 500 9,000 10

averag
12,000

10,000

8,000

6,000

4,000

2,000

0
1 2 3 4 5

average cost per year

 loss of value avg loss of value residual value maintenance cost in year t
9,750 9,750 55250 1,200
16,250 8,125 48750 1,800
21,450 7,150 43550 2,500
24,700 6,175 40300 3,100
26,000 5,200 39000 3,800
29,250 4,875 35750 4,700
32,500 4,643 32500 5,700
35,750 4,469 29250 6,800
42,250 4,694 22750 7,900
64,500 6,450 500 9,000

average costs

2 3 4 5 6 7 8 9 10

average cost per year avg loss of value avg maint cost

optimal replacement year: 5

avg maint cost cumulated cost total after t years average cost per year
1,200 10,950 10,950
900 19,250 9,625
833 26,950 8,983
775 33,300 8,325
760 38,400 7,680
783 46,350 7,725
814 55,300 7,900
850 65,350 8,169
878 79,750 8,861
900 111,000 11,100

average cost per year

12,000

10,950
10,000
9,625
8,983
8,325 8,169
8,000 7,900
7,680 7,725

6,000

4,000

2,000

0
1 2 3 4 5 6 7 8
year

11,100

8,861
8,169
25 7,900

6 7 8 9 10