Terms and definitions
Annual Energy Savings |
Annual sum of money savings generated by the investment, for instance costs saved for heating |
Annual Revenues |
Annual sum of money generated by the investment, for instance electricity sales |
Capital Costs |
The sum of the different type of costs related to the considered investment |
Depreciation |
The monetary value of an asset decreases over time due to use, wear and tear or obsolescence. This decrease is measured as depreciation |
Discount Rate |
Rate used to discount future cash flows in order to obtain their present value. The rate generally viewed as being the most appropriate is an organisation´s weighed cost of capital |
Discounted Payback Period |
Based on the same rationale as Simple Payback Period; the difference is represented by the fact the net cash flows are discounted in order to account for the time value of money |
IRR - Internal Rate Ratio |
Rate of return used in capital budgeting to measure the profitability of investment. It represents the discount rate at which the NPV of an investments becomes zero. |
NPV - Net present Value |
Discounted cash flow reflecting the time value of money. |
Operational & Maintenance Costs |
Annual operational costs including salaries, maintenance, fees, energy costs etc. |
Simple Payback Period |
The time in years for a project cumulative annual savings to equal its upfront costs |
Weighed Cost of Capital |
A company's weighted average cost of capital is the average interest rate it must pay to finance its assets, growth and working capital. It is also the minimum average rate of return it must earn on its current assets to satisfy its shareholders or owners, its investors, and its creditors. |