Scribd Logo
Upload

Welcome to Scribd!

  • 11 A-Engineering Economy Capitalized Cost.

    Uploaded by

    Maged Mohammad Hassan
    578 views7 pages
    What is capitalized cost?

    Original Title

    11ِA-engineering economy capitalized cost.

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    What is capitalized cost?

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    Download as pdf
    578 views7 pages

    11 A-Engineering Economy Capitalized Cost.

    Uploaded by

    Maged Mohammad Hassan
    What is capitalized cost?

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
    Flag for inappropriate content
    Download as pdf
    of 7
    Capitalized Cost (CC) — Permanent Alternatives = Capitalized Cost (CC): the present worth of an alternative that will last “forever”. Some examples are: » Public sector projects Bridges Dams. Irrigation Systems Railroads > > > > Capitalized Cost (CC) = Capitalized Cost (CC) for a uniform series A of end-of-period cash flows: 1- L P=A(PIA, i, n)=AL(14i)" — 1/141)" a 1- lim 4 Now, we have: CcC=Af Also, A= CC(i) Capitalized Cost (CC) vx as oy ener Procedure to Calculate Capitalized Cost’ i) A . Draw a cash-flow diagram showing all nonrecurring costs and at least two cycles of all recurring (periodic) costs and receipts. . Find the present worth of all nonrecurring amounts. . Find the equivalent annual worth through one life cycle of all recurring amounts and add this to all other uniform amounts occurring in years | through infinity. This results in a total equivalent uniform annual worth (AW). . Divide AW obtained in step 3 by the interest rate i to get its capitalized cost. . Add the CC values obtained in steps 2 and 4. Capitalized Cost (CC) Example 5.5 Find the capitalized cost of an infinite series of annual payments equal to $10,000 using an interest rate of 8% compounded annually. Solution: A = 10,000 and i = 0.08. CC = 10,000/0.08 = $125,000. Note: 10,000 (PIA,8%, 100) = $124,043 “> this value is approaching the limit of $125,000\ > Lbs nee TUT A« Elo,ve? CC = (2222 Py © 0.08 = 125j000 mien geen: 1 =5% peryear TET TTT = at & el ao $150,000, CC, .-150,0% ACh sd) A, (Pet 9 Es.) -E - pe Spo 5 (25! 13) CET (6.0560) Ag. 500-0966) pz = 5608 C = +150, 060 _ Soo.( 754 60)

    You might also like