Optimum Life of Equipment for Maximum Profit

by James Douglas,

Serial Information: Journal of the Construction Division, 1968, Vol. 94, Issue 1, Pg. 41-54

Document Type: Journal Paper


Equipment costs are one of the contractor's largest expenses. The correct determination of equipment life is fundamental to lower costs and higher profits. A mathematical model has been developed by the writer to aid the equipment owner in the economic analysis of his equipment problems. Equations are used to define the shape of the revenue and cost curves of construction equipment and combined in a program run on a digital computer. The computer plots a curve showing the relationship of the present worth of profits after tax to the life of the equipment. This technique provides a powerful analytic tool to aid the equipment owner in determining the economic life of his equipment.

Subject Headings: Lifeline systems | Equipment and machinery | Profits | Owners | Economic factors | Curvature | Construction equipment | Contractors and subcontractors

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