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so second is called asset replacement decision asset replacement decision it means that how quickly you should replace the assets like if you have a fleet of cars you are a distribution company or whatever you have 20 30 40 vehicles should you be changing your vehicles after every three years after every four years after every five years what so this is the topic which is called asset replacement decisions again we will find out our discounted cash flows there are typically several effects as the replacement period gets normal that is assets our handful normal number one is that annual running cost rise as the asset gets older running cost means the maintenance cost because when you are eating old vehicles you have to spend more money on where maintenance cost the trade-in value which means the selling price falls because the asset is older when sold so when you are selling a very own asset so as the assets are becoming old theyre selling price residual value also decreases obviously
