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Finance Dictionary and Glossary of Investment Terms
replacement cost
Definition 1.
The amount it would cost to replace an asset at current prices. If the cost of replacing an asset in its current physical condition is lower than the cost of replacing the asset so as to obtain the level of services enjoyed when the asset was bought, then the asset is in poor condition and the firm would probably not want to replace it.
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Definition 2.
The price that will have to be paid to replace an existing asset with a similar asset.
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