Comment by pfdietz
1 day ago
I'm not sure why you think not wearing out would necessarily make up for the capex being too high. Interest rates aren't zero.
1 day ago
I'm not sure why you think not wearing out would necessarily make up for the capex being too high. Interest rates aren't zero.
Not wearing out increases the time frame across which you can amortise the costs.
If option A costs $100,000/unit and needs to be replaced every 10 years, while option B costs $300,000/unit but lasts 50 years before replacement, option B is still cheaper in the long run, even factoring in interest rates.
(You can substitute "time until replacement" in the above with "time until maintenance costs exceed the original capex", and the logic remains the same.)