MANAGEMENT

Detailed explanation-1: -Replacement cost is a term referring to the amount of money a business must currently spend to replace an essential asset like a real estate property, an investment security, a lien, or another item, with one of the same or higher value.

Detailed explanation-2: -Replacement costs are the cash outlay that the business has to pay to replace an old asset at the existing market price. The price charged to replace the old asset with the new one having the same value is the replacement cost.

Detailed explanation-3: -How do I calculate the replacement cost value of my home? A quick method to estimate the replacement cost of your home is to multiply the square footage of your home by the average cost per square foot in your area. However, this is just a guideline.

Detailed explanation-4: -The big difference between the two is the depreciation.