value, replacement cost etc.? With one example, discuss how the process engineer differentiates between replacement value and market value of that equipment.
3- Please I want answer with steps. Many thanks
The difference between the market value and the replacement value of the equipment is to be mentioned along with example.
REPLACEMENT VALUE OF THE EQUIPMENT
It is the estimated cost of an equipment for construction with the current price of the equipment for the same size and equal utility for the same construction.
In simple words, it is the amount which a person or firm have to pay for the asset as per the present worth of the equipment.
It is the actual cost at which an item can be replaced which includes the amount of depreciation it has incurred.
In plant design and economics, the capitalized cost is generally taken into account to replace the chemical industry equipment like Heat Exchangers, Reactors, etc.
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