Replacement Costs
One of many
Replacement Cost
Replacement Cost New or “RCN” is the cost of replacing an asset with something of similar utility. RCN involves the understating purchasing prices over time. and here are some common examples of where Replacement Cost matters:
Insuring a group of assets that differ from general economic inflation
Project planning
Determining proper co-insurance coverage
One of a kind
Reproduction Cost
Reproduction Cost New is another form of replacement cost, but it considers replacing the asset with an exact replica. This involves understanding industry-specific inflation and what are the causes that may make the subject differ from its cohorts. Here are some examples:
Long-lived assets that are no longer being manufactured
Specialty engineered production lines
Assets with proprietary application
