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Capitalized value, or cost, is the sum of the all ANNUAL equivalent revenue payments and/or costs, divided by the interest rate involved, for infinite compound periods. Basically, how much revenue that project will generate or require if it is needed indefinitely long.

Factor tables make calculating the annual equivalent values fairly easy. The formula for calculation is:

A( 1/i )

Where A is the sum of annual equivalent values and i is interest rate.

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