What is ‘Absolute Physical Life’
The length of time that it takes for an asset takes to become fully depreciated, at which time it provides no additional use. The absolute physical life is often taken into consideration when companies purchase assets. The measure is typically associated with assets that have low risk of becoming technically obsolete.
Explaining ‘Absolute Physical Life’
When looking at the life of an asset, people can take contrasting perspectives. For example, let’s examine a manager’s decision to purchase new computers for his or her business. The manager may decide to base the decision on how long it will be until the computers become obsolete by conventional standards. On the other hand, if the manager isn’t worried about having older technology, he or she may care only about the absolute physical life of the computers, which can be considerably longer.
Further Reading
- Scaling and criticality in a stochastic multi-agent model of a financial market – www.nature.com [PDF]
- Financial Market Efficiency Should be Gauged in Relative Rather than Absolute Terms – mpra.ub.uni-muenchen.de [PDF]
- Economic assessment of municipal waste management systems—case studies using a combination of life cycle assessment (LCA) and life cycle costing (LCC) – www.sciencedirect.com [PDF]
- The age of reason: Financial decisions over the life cycle and implications for regulation – muse.jhu.edu [PDF]
- The normative economics of health care finance and provision – www.jstor.org [PDF]
- The ethical poverty line: a moral quantification of absolute poverty – www.tandfonline.com [PDF]
