Technology Abandonment and the Time Value of Diffusion

The Time Value of Money (TVM) is a foundational concept taught in Engineering Economics, used by decision-makers to determine if an investment is worth pursuing. The concept of the TVM is that money available in the present is worth more than the same amount in the future due to its potential earnin...

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Bibliographic Details
Published inIISE Annual Conference. Proceedings pp. 1140 - 1145
Main Authors Parvin, Albert J, Beruvides, Mario G
Format Journal Article
LanguageEnglish
Published Norcross Institute of Industrial and Systems Engineers (IISE) 01.01.2019
Subjects
Abandonment
Decision making
Diffusion
Economic impact
Economics
Engineering
Financing
Impact analysis
Market value
Opportunity costs
Trucking industry
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Summary:The Time Value of Money (TVM) is a foundational concept taught in Engineering Economics, used by decision-makers to determine if an investment is worth pursuing. The concept of the TVM is that money available in the present is worth more than the same amount in the future due to its potential earning capacity. TVM addresses the value of money (i.e., investment) with respect to time, but the inverse, the valuation of time, is really not the concern of economics. The value of money changes over time but does the value of time itself change as it progresses from present to future. One hour spent today is the same as one hour spent tomorrow. Conversely, a dollar spent today will not have the same value as a dollar spent next year based on the core principle of finance that money can earn interest. A standardized economic measure of technology abandonment, referenced to units of time, termed Diffusion Time Value, is a basic technological approach to accessing a technology's viability. So, the opportunity value of time, related to a technology's potential economic impact cannot be ignored. This paper explores the characteristics and implications of the Time Value of Diffusion in technology abandonment.