Capital Recovery with Return, CR(i)
Being able to understand and calculate the economic life of an asset begins with understanding and calculating capital recovery with return, CR(i). CR(i) describes the cost of ownership of an asset in terms of an equal-payment-series over some given time span of ownership. CR(i) is a major component in economic-life calculations.
The cost of ownership of an asset is a combination of the drop in value of that asset over time together with the interest on the invested capital. Figure 11.1 illustrates the components of CR(i).
Figure 11.1. Cash flow diagram showing the components of CR(i)
Assume that some special-purpose ...
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