functional replacement cost

Replacement cost is the cost of replacing an item with an equivalent item of the same or similar quality. Functional replacement cost is the cost of replacing an item with an equivalent item of equivalent performance—even if the item has a different design or is of different quality. For example, if an old computer needs to be replaced, functional replacement cost would consider the cost of a computer that has the same performance capabilities, even if it is not the same model of the original computer.