salvage the satellite and replace it with a new satellite. This decision and the values associated with each alternative are shown in Figure 4.2. R refers to the annual revenues generated by continued use of the satellite, is the annual operation and maintenance cost as above, C^is the cost of disposal, CD is the cost of replacing the satellite, V$ is the salvage value of the satellite and PV(») refers to present value. It is desirable to take the choice which has the highest present value at the date of the decision. The resulting decision rules are shown on the right side of Figure 4.2. Thus it becomes apparent that if a decision is made to salvage the SPS satellite, its salvage value should be greater than its continued use value. This notion, once again, argues for relatively substantial salvage values associated with annual degradation rates in the range of 0 to 1 percent per year, so long as there exist no wearout failure modes that will occur shortly after 30 years of system use. FIGURE 4.2 THE DECISION TO DECOMMISSION AN SPS SATELLITE
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