Max S. Peters,
University of Colorado
Klaus Timmerhaus,
University of Colorado, Boulder
Ronald E. West,
University of Colorado, Boulder
| Annual operating cost | Estimated annual costs to maintain and support an alternative.
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| Book value | Remaining capital investment in an asset after depreciation is accounted for.
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| Breakeven point | Quantity at which revenues and costs are equal, or two alternatives are equivalent.
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| Capitalized cost | Present worth of an alternative that will last forever (or a long time).
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| Capital recovery | Equivalent annual cost of owning an asset plus the required return on the initial investment.
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| Cash flow | Actual cash amounts which are receipts (inflow) and disbursements (outflow).
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| Cost estimating relationships | Relations that use design variables and changing costs over time to estimate current and future costs.
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| Cost of capital | Interest rate paid for the use of capital funds; includes both debt and equity funds. For debt and equity considered, it is weighted average cost of capital.
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| Depreciation | Reduction in the value of assets using specific models and rules; there are book and tax depreciation methods.
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| Future amount or worth | Amount at some future date considering time value of money.
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| Gross income | Income from all sources for corporations or individuals.
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| Inflation rate | Rate that reflects changes in the value of a currency over time.
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| Interest rate | Interest expressed as a percentage of the original amount per time period; nominal and effective rates.
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| Life (estimated) | Number of years or periods over which an alternative or asset will be used; the evaluation time.
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| Minimum attractive rate of return | Minimum value of the rate of return for an alternative to be financially viable.
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| Net cash flow | Resulting, actual amount of cash that flows in or out during a time period.
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| Net present value | Another name for the present worth.
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| Payback period | Number of years to recover the initial investment and a stated rate of return.
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| Present amount or worth | Amount of money at the current time or a time denoted as present.
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| Rate of return | Compound interest rate on unpaid or unrecovered balances such that the final amount results in a zero balance.
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| Recovery period | Number of years to completely depreciate an asset.
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| Salvage value | Expected trade-in or market value when an asset is traded or disposed of.
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| Taxable income | Amount upon which income taxes are based.
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| Tax rate | Decimal rate, usually graduated, used to calculate corporate or individual taxes.
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2003 McGraw-Hill Higher Education