Engineering Economy
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Profitability and Economic Choice
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Glossary of
Business and
Economic
Choice

To use the glossary, simply click on the first letter of the term of interest below:

Removal Cost: A cash flow in a comparative or normal economic study relating to the gross cost of removal of retired property excluding any gross salvage.
Repeated Plant Assumption: In a comparative economic study, each study alternative must provide the same service capacity and service life. This goal is achieved by repeating capital, revenue and expense cash flows from all the studies as necessary to terminate all studies at the same future time to provide an equal amount of service. Because monies have a smaller and smaller effect on the economic evaluators as the monies extend farther and farther into the future, some organizations will mandate that the studies will be truncated at some future point in time where the impact of truncation will hopefully be minimal.
Remaining Capital Balance: The amount of capital for which the project is responsible to provide a return and repayment, at any given time during the study life. It equals the original amount less accumulated depreciation and tax credits to that point in time.
Revenue: An incoming cash flow, part of a standard economic analysis. Note that revenue is excluded from a comparative cost study that assumes identical revenues for each plan.

Tax Base: The term used instead of Undepreciated Asset when capital cost allowance is used instead of depreciation.
Time Value of Money: Because of interest, money today is worth more in the future. The inverse is also true.
Taxable Income: Total revenues less allowable deductible elements like depreciation or CCA, ad valorem taxes, debt interest and operating expenses. The government obtains its share of an organization's revenue based on a percentage of that amount.