replacement cost

Definition

The amount it would cost to replace an asset at current prices. If the cost of replacing an asset in its current physical condition is lower than the cost of replacing the asset so as to obtain the level of services enjoyed when the asset was bought, then the asset is in poor condition and the firm would probably not want to replace it.

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Related Terms

replacement cost accounting, renter's insurance

'replacement cost ' appears in the definitions of these terms on BusinessDictionary.com
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