Energy Accounting and Economics Flashcards
Given a discount rate, this value is the __ __ of a future payment or the value of a stream of cash flows in the future
Present Value
This value is a one time positive or negative cash flow in the future
Future Value
A series of equal cash flows that occur evenly spaced over time. End of year accounting, meaning that __ __ __ are treated as occurring only at the end of the year
Annual Cash Flow aka annuity
The difference between the annual savings of a project and its initial annuatized investment cost
Annual Value
The Number of compounding interest periods are
payments of savings cash flows
the amount charged by a lender, expressed as % principle
Interest Rate
This interest rate is used in discounted cash flow analysis to determine the present value of cash flows
Discount Rate
Acceptable rate of return. high risk projects must meet a higher __ __
Hurdle Rate or MARR
This number must be higher than the hurdle rate in order to be approved
= Discount Rate such that the PV Future Cash Flows = PV costs
You can set the initial cost of a project = the PV of the future cash flows and then solve for the discount rate that would make this possible
Internal Rate of Return
benefit to cost ratio
Present Value of the savings over Present Value of the costs
1.15 is desirable
Savings to Investment Ratio
= (PV benefits) - (PV Costs)
A positive __ will be profitable.
An investment with a negative __ will result in net loss
Net Present Value
What I want to know given what I do know P = present time A = yearly benefits F = one time benefit I = discount rate
Find P given that A, I, and N are known
Time Value of Money
Cost over savings per year
Simple Payback
= A * (P/A, i, n)
Present Value
= Initial Cost + PV Cash Flow
Life Cycle Cost
