Capital recovery factor

The most common approach to fixed cost estimation iavolves the use of a capital recovery factor to give the annual depreciation and return on capital. This factor typically is between 15 and 20% of the total capital investment. Property taxes are taken as 1—5% of the fixed capital and iasurance is assumed to be 1—2% of the fixed capital. If annual depreciation is estimated separately, it is assumed to be about 10% of the fixed capital investment. The annual iaterest expense is sometimes neglected as an expense ia preliminary studies. Some economists even beHeve that iaterest should be treated as a return on capital and not as part of the manufactufing expense. 

CRF Capital recovery factor RDF Refuse-derived fuel... 

This is then converted to annualized capital costs (ACC) with the use of the capital recovery factor (CRF), which can be calculated from the following equation ... 

The CCE spreads the investment over the lifetime of the measure into equal annual payments with the familiar capital recovery factor. The annual payment is then divided by the annual energy savings to yield a cost of saving a unit of energy. It is calculated using the following formula ... 

The right-hand side of Equation (3.5) is known as the capital recovery factor or present worth factor, and the inverse of the right-hand side is known as the repayment multiplier r. 

Cost Estimation. The capital costing equations used in the cogeneration problem have been designed to yield approximate capital and maintenance expenditures and to reflect the consequence of changing the system s variables on these costs. The form of these equations expresses equipment costs in terms of stream and performance variables. In all cases a capital recovery factor is used to account for the cost of capital (i = 15%) and estimated useful life (n = 40 years). 

Because of the considerable uncertainties in all the assumptions made, this projected hydrogen cost should not be rigorously compared with the cost projections we have made for the other processes discussed in this paper. Moreover, we have not reworked Knoche and Funk s economics to conform with the guidelines of Table 1. (The assumptions they made were an 80% stream factor, utility financing, 12 % capital recovery factor, and mid-1976 dollars.)... 

The expression [(1 + i)n — l]/[i(l + i)B] is referred to as the discrete uniform-series present-worth factor or the series present-worth factor, while the reciprocal [i(l + /)"]/[(1 + /) - 1] is often called the capital-recovery factor. 

In this equation, note that the CRC is given a negative sign, because it is a negative cash flow item. The CRC, in turn, is the product of the TCI and the capital recovery factor, or... 

Calculate the capital recovery factor. In this method, each of the undiscounted net cash flows (NCFs) for years 1 to 20 is algebraically added to the capital recovery cost (CRC) to obtain the equivalent uniform annual revenue (EUAR). The CRC is the product of the total capital investment,... 

TCI, and the capital recovery factor, CRF, which is defined and calculated by Eq. (18.7) of the introduction. The project with the higher EUAR will be the one to fund. The pertinent input data are as follows ... 

Determine the EUAR for each option, assuming a 6% hurdle rate. Following the procedure of Example 18.7, calculate for each option the undiscounted net cash flow, the capital recovery factor, the capital recovery cost, and the EUAR. The results are as follows ... 

CRF Capital recovery factor RGRA Resource Gonservation and Recovery Act... 

The annual operation costs of an outdated environmental control device is 75,000. Under a proposed emission reduction plan, the installation of a new processing system will require an initial cost of 150,000 and an annual operating cost of 15,000 for the first 5 years. Determine the annualized cost for the new processing system by assuming the system has only 5 years (n) operational life. The interest rate (0 is 7%. The capital recovery factor (CRF) or annual payment of a capital investment can be calculated as follows ... 

The cost of hydrogen was estimated by considering the capital costs, capital recovery factor, the operating expenses of the refueling station, the cost of utilities (fuel and electricity), and the cost of catalysts. The natural gas cost was assumed to be 5/ GJ on a higher heating value (HHV) basis, and the electricity cost was assumed to be 70/kWhr. The efficiency of the system (75% on a LHV basis) was used to determine the required amount of natural gas. A capacity factor of 90% for plant utilization was used. The capital recovery factor was determined as 13.1%, assuming 10% interest rate over 15 years. 

A template for calculating cost of electricity has been developed. The analysis considers efficiency, capital costs, operating and maintenance costs, capital recovery factor, availability, fuel price and other factors. A detailed economic analysis will be performed. 

The term multiplying A in equation (15.9) is called present-value series factor, while the term multiplying f in (15.10) is called annualisation or capital-recovery factor. 

Table 15.2 Present-value series and capital-recovery factors...

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