Whitestone Report: An Alternative View of Facility Depreciation and Recapitalization Costs
SANTA BARBARA,
CA—February 26, 2004—Current
assumptions in the facility literature
about depreciation and capital
requirements are based
on opinion and ad hoc models.
Planning for these expenditures,
arguably $100 billion per year
in the U.S alone, should be done
with a more
credible and objective model.
This short paper describes an
alternative approach to forecasting
recapitalization costs based
on a model of
economic depreciation. The economic
depreciation approach should
be particularly attractive for
analysts requiring objective
funding
benchmarks, and for organizations
with facility portfolios so large
that annual condition assessment
is impractical.
Whitestone Research,
with headquarters in Santa Barbara, California, specializes in applied
economic research and software development. Whitestone products and
services are used every year by hundreds of major corporations, government
agencies, and public and private institutions.
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