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Capitalized Cost Formula

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Capitalized Cost, also known as capital cost, refers to the total cost incurred to acquire, construct, or produce a long-term asset that provides benefits over an extended period. Check FAQs

K = V + (\frac{C R}{{(1 + i)}^{n} - 1})

K - Capitalized Cost?V - Original Cost of Equipment?C_R - Replacement Cost?i - Discrete Compound Interest Rate?n - Number of Interest Periods?

Capitalized Cost Example

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Here is how the Capitalized Cost equation looks like with Values.

Here is how the Capitalized Cost equation looks like with Units.

Here is how the Capitalized Cost equation looks like.

732926.8293 = 50000 + (\frac{70000}{{(1 + 0.05)}^{2} - 1})

732926.8293 = 50000 + (\frac{70000}{{(1 + 0.05)}^{2} - 1})

732926.8293 = 50000 + (\frac{70000}{{(1 + 0.05)}^{2} - 1})

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Capitalized Cost Solution

Follow our step by step solution on how to calculate Capitalized Cost?

FIRST Step Consider the formula

K = V + (\frac{C R}{{(1 + i)}^{n} - 1})

Next Step Substitute values of Variables

∴

K = 50000 + (\frac{70000}{{(1 + 0.05)}^{2} - 1})

Next Step Prepare to Evaluate

∴

K = 50000 + (\frac{70000}{{(1 + 0.05)}^{2} - 1})

Next Step Evaluate

∴

K = 732926.829268292

LAST Step Rounding Answer

∴

K = 732926.8293

Capitalized Cost Formula Elements

Variables

Capitalized Cost

Capitalized Cost, also known as capital cost, refers to the total cost incurred to acquire, construct, or produce a long-term asset that provides benefits over an extended period.

Symbol: K

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Capitalized Cost

Original Cost of Equipment

Original Cost of Equipment refers to the total amount of money spent to acquire or purchase a specific piece of equipment when it was initially obtained for use in a business or operational setting.

Symbol: V

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Original Cost of Equipment

Replacement Cost

Replacement costs refer to the estimated expenses or expenditures required to replace an existing asset or item with a new one of similar functionality, condition, and capacity.

Symbol: C_R

Measurement: NAUnit: Unitless

Note: Value can be positive or negative.

Formulas to find Replacement Cost

Discrete Compound Interest Rate

Discrete Compound Interest Rate rate refers to the interest that is calculated and compounded at specific, discrete intervals during a given period, rather than continuously.

Symbol: i

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Discrete Compound Interest Rate

Number of Interest Periods

The number of interest periods, often denoted as n, represents the total count of compounding periods within a specified time frame for an investment or loan.

Symbol: n

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Number of Interest Periods

Other formulas in Interest and Investment Costs category

Go Future Worth of Annuity

F = A \cdot (\frac{{(1 + i)}^{n} - 1}{i})

Go Future Worth of Annuity given Present Annuity

F = P \cdot ({(1 + i)}^{n})

Go Future Worth of Perpetuity

F P = A \cdot (\frac{{(1 + i)}^{n} - 1}{(i)})

Go Present Worth for Initial Replacement

P worth = (\frac{C R}{{(1 + i r)}^{n} - 1})

How to Evaluate Capitalized Cost?

Capitalized Cost evaluator uses Capitalized Cost = Original Cost of Equipment+(Replacement Cost/((1+Discrete Compound Interest Rate)^(Number of Interest Periods)-1)) to evaluate the Capitalized Cost, Capitalized Cost also known as capital cost, refers to the total cost incurred to acquire, construct, or produce a long-term asset that provides benefits over an extended period. Capitalized Cost is denoted by K symbol.

How to evaluate Capitalized Cost using this online evaluator? To use this online evaluator for Capitalized Cost, enter Original Cost of Equipment (V), Replacement Cost (C_R), Discrete Compound Interest Rate (i) & Number of Interest Periods (n) and hit the calculate button.

FAQs on Capitalized Cost

What is the formula to find Capitalized Cost?

The formula of Capitalized Cost is expressed as Capitalized Cost = Original Cost of Equipment+(Replacement Cost/((1+Discrete Compound Interest Rate)^(Number of Interest Periods)-1)). Here is an example- 494092 = 50000+(70000/((1+0.05)^(2)-1)).

How to calculate Capitalized Cost?

With Original Cost of Equipment (V), Replacement Cost (C_R), Discrete Compound Interest Rate (i) & Number of Interest Periods (n) we can find Capitalized Cost using the formula - Capitalized Cost = Original Cost of Equipment+(Replacement Cost/((1+Discrete Compound Interest Rate)^(Number of Interest Periods)-1)).

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Capitalized Cost Formula

Capitalized Cost Example

Capitalized Cost Solution

Capitalized Cost Formula Elements

Other formulas in Interest and Investment Costs category

How to Evaluate Capitalized Cost?

FAQs on Capitalized Cost

Variable Name