This research has the main aim of presenting a decisionsupport system for equipment replacement analysis in theindustries or other types of business. The decision supportsystem is developed with Microsoft Foxpro 2.0 language on apersonal computer. The program consists of four parts : 1) datamanagement subsystem for the user to assign values to thenecessary factors and set up the database file for each kind ofequipment, 2) model management subsystem that uses the concept oftime value of money, annual cost, and minimum annual cost for theevaluation of the various alternatives, 3) analysis managementsubsystem, and 4) user-interface management subsystem thatprovides conversational dialogue with the user for inputting thedata and recommending the appropriate theoretical alternatives. The analysis management subsystem is divided into two maincategories : the economic life of the defender, and thereplacement analysis which is composed of three parts : a)Capacity expansion analysis, b) Comparison between the defenderand the challenger, with or without income tax consideration, andc) Lease or buy analysis. Based on the testing of the program with the problems ofequipment replacement analysis in a factory for each of the abovecases, the user is able to analyze the problem without priorskill in this area. Moreover, the decision support system helpssave time compared to manual operation and enables the user tosee throughly all the relevant factors. The test results in thecomparison between the defender and the challenger indicate thatincome tax consideration may be crucial to the company's decision.