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FE Reference Pages
FE Reference Pages
Uniform Gradient (1 + i )n − 1 − n
to P given G (P/G, i%, n)
Present Worth i 2 (1 + i ) i (1 + i )
n n
Uniform Gradient †
to F given G (F/G, i%, n)
(1 + i )n − 1 − n
Future Worth i2 i
Uniform Gradient 1 n
to A given G (A/G, i%, n) −
Uniform Series i (1 + i )n − 1
Subscripts
j ����������� at time j
n ���������� at time n
† ���������� F/G = (F/A – n)/i = (F/A) × (A/G)
RATE-OF-RETURN
Modified Accelerated Cost Recovery System (MACRS) The minimum acceptable rate-of-return (MARR) is that
Dj = (factor) C interest rate that one is willing to accept, or the rate one
A table of MACRS factors is provided below. desires to earn on investments. The rate-of-return on an
investment is the interest rate that makes the benefits and costs
BOOK VALUE equal.
BV = initial cost – Σ Dj
BENEFIT-COST ANALYSIS
TAXATION In a benefit-cost analysis, the benefits B of a project should
Income taxes are paid at a specific rate on taxable income. exceed the estimated costs C.
Taxable income is total income less depreciation and B – C ≥ 0, or B/C ≥ 1
ordinary expenses. Expenses do not include capital items,
which should be depreciated.
MACRS FACTORS
Recovery Period (Years)
Year 3 5 7 10
Recovery Rate (Percent)
1 33.33 20.00 14.29 10.00
2 44.45 32.00 24.49 18.00
3 14.81 19.20 17.49 14.40
4 7.41 11.52 12.49 11.52
5 11.52 8.93 9.22
6 5.76 8.92 7.37
7 8.93 6.55
8 4.46 6.55
9 6.56
10 6.55
11 3.28