Equipment Replacement vs Repair Cost Calculator
Compare the total cost of repairing existing equipment versus replacing it with new equipment over a defined time horizon, factoring in repair costs, downtime losses, energy efficiency, and residual values.
Existing Equipment (Repair Option)
New Equipment (Replace Option)
Shared Parameters
Formulas Used
Annual Operating Cost = Annual Maintenance + Annual Energy Cost + (Downtime Days × Revenue Lost per Day)
Present Value of Annuity (operating costs over n years at discount rate r):
PV = C × [1 − (1 + r)−n] / r (if r = 0: PV = C × n)
PV of Single Amount (salvage value at end of horizon):
PV = FV / (1 + r)n
Total NPV of Costs – Repair = Repair Cost + PV(Annual Op Costold) − PV(Salvageold)
Total NPV of Costs – Replace = (Purchase Price + Installation − Incentives) + PV(Annual Op Costnew) − PV(Salvagenew)
Equivalent Annual Cost (EAC) = NPV × r / [1 − (1 + r)−n]
Allows fair comparison of options with different cost structures on a per-year basis.
Simple Payback Period = (Upfrontreplace − Upfrontrepair) / (Annual Op Costold − Annual Op Costnew)
Assumptions & References
- Reference: Blank & Tarquin, Engineering Economy, 8th ed.; ASHRAE Handbook – HVAC Applications, Chapter on Owning and Operating Costs.