# Estimating the cost of an assett that needs to be replenished [closed]

I am working with hard drives. For simplicity, let's say all drives have the same capacity, 1TB and all cost $100. They typically last about 4 years, when they need to be replaced. They drop in price about 50% over that period of time. They cost 100 dollars for the first for years,$50 for the next 4 years, etc.

What's the usual way of estimating the cost of something like this?

## closed as off-topic by optimal control, Giskard, FooBar, cc7768, VicAcheFeb 25 '16 at 17:16

• This question does not appear to be about economics, within the scope defined in the help center.
If this question can be reworded to fit the rules in the help center, please edit the question.

• Is this an accounting question? meta.economics.stackexchange.com/questions/1526/… – Giskard Feb 22 '16 at 19:25
• I'm voting to close this question as off-topic because it belongs to another stack exhcange network. – optimal control Feb 23 '16 at 9:45
• @optimalcontrol Which one? – Giskard Feb 23 '16 at 11:53
• I'm voting to close this question as off-topic because it is not about Economics – FooBar Feb 23 '16 at 16:11
• This is the best SE for it – OneSolitaryNoob Feb 23 '16 at 16:20

## 1 Answer

The retail price should include the total net present value of use of the item. At any given point in time, the value of the item is the purchase cost minus accumulated depreciation. Depreciation should include both physical wear and any non-physical types of depreciation such as obsolescence.