Capital Asset Valuation and Depreciation for Stochastically Deteriorating Equipment

P.C. Jones; W.J. Hopp; J.L Zydiak

doi:10.1080/00137919208903084

Back

Capital Asset Valuation and Depreciation for Stochastically Deteriorating Equipment

Journal article

Peer reviewed

Capital Asset Valuation and Depreciation for Stochastically Deteriorating Equipment

P.C. Jones, W.J. Hopp and J.L Zydiak

The Engineering economist, Vol.38(1), pp.19-30

1992

DOI: 10.1080/00137919208903084

View Online

Abstract

Abstract This paper develops a capital asset valuation theory for stochastically deteriorating equipment in the absence of an active secondary (resale) market to provide prices that reflect economic value. With this theory, we define an economic depreciation schedule that satisfies two properties. First, book value of equipment depreciated according to this schedule equals conditional expected economic value; and second, the schedule is fair in that expected capital gain (or loss) is zero.

Details

Title: Subtitle: Capital Asset Valuation and Depreciation for Stochastically Deteriorating Equipment
Creators: P.C. Jones - Northwestern University
W.J. Hopp - Northwestern University
J.L Zydiak - Loyola University Chicago
Resource Type: Journal article
Publication Details: The Engineering economist, Vol.38(1), pp.19-30
DOI: 10.1080/00137919208903084
ISSN: 0013-791X
eISSN: 1547-2701
Publisher: Taylor & Francis Group
Number of pages: 12
Language: English
Date published: 1992
Academic Unit: Business Analytics
Record Identifier: 9984963119302771

Metrics

1 Record Views