Capitalized Cost (CC)

Capitalized Cost (CC) is the present worth of an alternative that is assumed to have a perpetual life.  Public sector projects such as bridges, dams, irrigation systems, and railroads fall into this category.  In addition, charitable organization endowments are evaluated using capitalized cost methods.

  CC = AW / i

          

  The application of this equation can become complicated with the presence of nonrecurring cash flows.

 

  It is very important for you to know how to apply this equation.