Abstract
Smith, and subsequently others, have argued that equipment replacement decisions concern the minimization of cost in producing a given output. Faris and Perrin were the first to delineate a point-input, point-continuous, outputreplacement model for farm machinery. This model was later extended by incorporating specific expressions for taxes and inflation (Chisholm; Kay and Rister; Bates, Rayner, and Custance; Perry and Nixon; Perry, Bayaner, and Nixon). Reid and Bradford used a multiperiod, mixedinteger programming model to determine replacement intervals within the overall strategies for a farm. Chisholm; Leatham and Baker; and Perrin recast the replacement decision as one where the entrepreneur maximizes the present value of the future stream of residual earnings from the productive process associated with the asset.
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