Glossary Terms

Question 1

Annual amount or annual worth

A or AW

Answer 1

Equivalent uniform annual worth of all cash inflows and outflows over estimated life.

Question 2

Benefit / Cost ratio

B/C

Answer 2

The ratio of a projects benefits to costs expressed in PW, AW, or FW terms.

Question 3

Bond dividend

I

Answer 3

Dividend (interest) paid periodically on a bond.

Question 4

Annual operating cost

AOC

Answer 4

Estimated annual costs to maintain and support an alternative

Question 5

Book value

BV

Answer 5

Remaining investment in an asset after depreciation is removed.

Question 6

Borrowing rate

i_b

Answer 6

Interest rate on externally borrowed capital funds

Question 7

Breakeven point

Q_BE

Answer 7

Quantity at which revenues and costs are equal, or two alternatives are equivalent

Question 8

Capital recovery

CR

Answer 8

Equivalent annual cost of owning an asset, plus the required return on the initial investment.

Question 9

Capitalized cost

CC or P

Answer 9

Present worth of an alternative that will last forever (or a long time).

Question 10

Cash flow

CF

Answer 10

Actual cash amounts, which are cash inflows and outflows.