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| Author: | Lund, J. R. |
| Title: | The value and depreciation of existing facilities : The case of reservoirs. |
| Journal: | Engineering Economist
1989 : FALL, VOL. 35:1, p. 1-24 |
| Index terms: | VALUE ANALYSIS CAPITAL INVESTMENT ASSET VALUATION |
| Language: | eng |
| Abstract: | The value of an asset is determined by the net economic value of its production over time. This value is summarized by the net present value of all present and future production. Change in asset value, depreciation or appreciation, results from both changes in the economic value of each unit of production and the asset's physical productivity. A theory of depreciation expressing this approach is derived from first principles of engineering economics. The asset's initial fabrication cost is not directly relevant to determining its net economic value once the asset exists. The theory is illustrated for the case of water resource reservoirs. |
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