Annual amount or worth (A or AW) | Equivalent uniform annual worth of all cash inflows and outflows over estimated life.
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Annual operating cost (AOC) | Estimated annual costs to maintain and support an alternative.
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Average ( (0.0K) ) | Measure of central tendency; average of sample values.
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Benefit/cost ratio (B/C) | Ratio of a project's benefits to costs expressed in PW, AW, or FW terms.
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Bond dividend (I) | Dividend (interest) paid periodically on a bond.
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Book value (BV) | Remaining investment in an asset after depreciation is removed.
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Borrowing rate (ib) | Interest rate on externally borrowed capital funds.
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Breakeven point (QBE) | Quantity at which revenues and costs are equal, or two alternatives are equivalent.
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Capital recovery (CR) | Equivalent annual cost of owning an asset plus the required return on the initial investment.
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Capitalized cost (CC or P) | Present worth of an alternative that will last forever (or a long time).
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Cash flow (CF) | Actual cash amounts, which are receipts (inflows) and disbursements (outflows).
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Cash flow before or after taxes (CFBT or CFAT) | Cash flow amount before relevant taxes or after taxes are applied.
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Compounding frequency (m) | Number of times interest is compounded per period (year).
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Cost estimating relationships (C2 or CT) | Relations that use design variables and changing costs over time to estimate current and future costs.
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Cost of capital (WACC) | Interest rate paid for the use of capital funds; for debt and equity considered, it is weighted average cost of capital.
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Debt-equity mix (D-E) | Percentages of debt and equity investment capital used by a corporation to fund projects.
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Depreciation (D) | Reduction in the value of assets using specific models and rules; there are book and tax depreciation methods.
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Depreciation rate (dt) | Annual rate for reducing the value of assets using depreciation.
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Economic service life (ESL) | Number of years at which the AW of costs is a minimum.
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Expenses (E) | All corporate costs incurred in transacting business.
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First cost (P and B) | Total initial cost—purchase, setup, etc.; also the basis for depreciation.
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Future amount or worth (F or FW) | Amount at some future date considering time value of money.
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Gradient, arithmetic (G) | Uniform change (+ or -) in cash flow each time period.
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Gradient, geometric (g) | Constant rate of change (+ or -) each time period.
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Gross income (GI) | Income from all sources for corporations or individuals.
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Inflation rate (f) | Rate that reflects changes in the value of currency over time.
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Interest | Simple interest is based on the principal only; compounding accrues interest on principal plus all accumulated interest.
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Interest rate (i or r) | Interest expressed as a percentage of the original amount per time period; nominal (r) and effective (i) rates.
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Interest rate, inflated (if) | Interest rate adjusted to take inflation into account.
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Life; study period (n) | Number of years or periods over which an alternative or asset will be used; the evaluation time.
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Measure of worth (Varies) | Value, such as PW, AW, i*, B/C, used to judge economic viability.
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Minimum attractive rate of return (MARR) | Minimum value of the rate of return for an alternative to be financially viable.
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Net cash flow (NCF) | Resulting net amount of cash that flows in or out during a time period.
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Net operating income (NOI) | Difference between gross income and expenses; same as EBIT—earnings before interest and taxes.
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Payback period (np) | Number of years to recover the initial investment and a stated rate of return.
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Present amount or worth (P or PW) | Amount of money at the current time or a time denoted as present.
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Random variable (X) | Parameter or characteristic that can take on any one of several values; discrete and continuous.
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Rate of return, external (i′ or i″) | Unique compound interest rate resulting from specified reinvestment and/or borrowing rates.
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Rate of return, internal (i* or ROR) | Compound interest rate on unpaid or unrecovered balances such that the final amount results in a zero balance.
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Recovery period (n) | Number of years to completely depreciate an asset.
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Reinvestment rate (ir) | Investment rate for an excess (positive) net cash flow.
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Salvage value (S) | Expected trade-in or market value when an asset is traded or disposed of.
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Standard deviation (s) | Measure of dispersion or spread about the expected value or average.
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Taxable income (TI) | Amount upon which income taxes are based.
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Tax rate (T) | Decimal rate, usually graduated, used to calculate corporate or individual taxes.
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Tax rate, effective (Te) | Single-figure tax rate incorporating (graduated) rates for federal, state and local taxes.
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Time (t) | Indicator for a time period.
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Value added (EVA) | Economic value added by a project to the corporation's net worth.
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