Equipment

Corporate production equipment belongs to the category of Corporate Tools that I covered in detail in the appropriate section of this guide. In this section, you are dealing with financial analysis of corporate equipment; therefore, you need to always concern yourself with the following questions:

Should we consider operating this specific piece of equipment or should we replace it with another one? Or at least perform a significant upgrade? Or maybe we should sell it altogether – without replacement of any kind?

To choose the best course of action (from the financial value perspective, obviously), you must develop financial models for all three scenarios and choose the one with the highest NPV and IRR.