Equipment Replacement Calculator
Whether to keep an ageing machine or replace it — the present value of running each over the horizon, with rizing maintenance and downtime on the old one against the price, lower costs and productivity gain of the new — and the year the decision flips.
An old machine costs more each year — maintenance grows, downtime grows — and its resale value shrinks.
How the equipment replacement calculator works
An old machine costs more each year — maintenance grows, downtime grows — and its resale value shrinks. A new one costs a lump sum now and less each year after. Discount both streams to today and compare; the lower present cost wins. The trade-in value of the old machine offsets the new price, and the residual values at the end of the horizon come off each side.
The cross-over year is the honest answer to "how long can we put this off".
Formula: PV_keep = Σ (M₀(1+g)^t + D) / (1+r)^t − S_old / (1+r)^H; PV_replace = P − T + Σ (M_new − G) / (1+r)^t − S_new / (1+r)^H
Worked examples
| Inputs | Recommendation | Note |
|---|---|---|
| A five-year horizon | Replace — saves 15170 in present value over 5 years | close — check the assumptions |
| A longer horizon | Replace — saves 66040 in present value over 8 years | replacing pulls ahead |
| A cheap old machine | Keep — replacing costs 36414 more in present value over 5 years | keep it |
FAQFrequently asked questions
How do I decide whether to replace a machine?
Compare the present cost of keeping it — rizing maintenance, downtime, lost resale — with the present cost of the new one net of trade-in, its lower running costs and its gains. Lower present cost wins.
Why does maintenance growth matter?
Because it compounds: 15% a year doubles maintenance in five years. It is the term that eventually makes any machine worth replacing.
What is the discount rate?
Your cost of capital or hurdle rate — what the replacement money could earn elsewhere. Higher rates favor keeping, because the new machine's costs are up front and its savings come later.
What is the cross-over year?
When the cumulative undiscounted cost of replacing falls below that of keeping. It is a rough guide to how long the decision can wait; the present-value comparison is the real test.
What is left out?
Tax depreciation, disposal costs, the risk of a catastrophic failure on the old machine, and capacity or quality improvements not captured in the productivity value.
Where these figures come from
- Nakajima (1988) — Introduction to TPM — the origin of Overall Equipment Effectiveness and its six big losses
- OSHA — the US workplace safety administration
Last checked: September 2026. Definitions follow standard operations-management practice; where plants commonly differ, the page says so.