Enter the initial cost ($), the maintenance cost ($), and the interest rate (%) into the Capitalized Cost Calculator. The calculator will evaluate and display the Capitalized Cost.
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Capitalized Cost Formula
The following formula is used to calculate the Capitalized Cost.
CC = IC + MC*(1/(R/100))
- Where CC is the Capitalized Cost ($)
- IC is the initial cost ($)
- MC is the maintenance cost ($)
- R is the interest rate (%)
To calculate a capitalized cost, multiply the maintenance cost by 1 over the interest rate, then add the result to the initial cost.
How to Calculate Capitalized Cost?
The following example problems outline how to calculate Capitalized Cost.
Example Problem #1
- First, determine the initial cost ($). The initial cost ($) is given as 200,000 .
- Next, determine the maintenance cost ($). The maintenance cost ($) is calculated as 40,000 .
- Next, determine the interest rate (%). The interest rate (%) is found to be 15.
- Finally, calculate the Capitalized Cost using the formula above:
CC = IC + MC*(1/(R/100))
Inserting the values from above yields:
CC = 200000 + 40000*(1/(15/100)) = ($) 466,666.66
Example Problem #2
The variables needed for this problem are provided below:
initial cost ($) = 4000
maintenance cost ($) = 2000
interest rate (%) = 10
Entering these values and solving gives:
CC = IC + MC*(1/(R/100)) = ($) 24,000