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Calculate replacement cost of equipment

Good day, If I purchased an item for R500 in 2015, how do I calculate the replacement cost value to replace this equipment in 2018 without considering depreciation (eg. if the equipment was completely burnt, I would have to purchase at current market value)? How can I incorporate the rand/dollar exchange rate as well as Producer Price Index (PPI) to the calculation? Essentially I want the calculation to give me an answer as close as possible to the market value.

Your Answer

Replacement cost is R500. Because there is no exchange of an equipment (old equipment is fully burnt). It is newly purchased in the place of old equipment so entire cost incurred to the equipment is treated as cost of equipment

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