Adjusting Dollar Amounts for Time of Occurrence

  • Rosalie T. Ruegg
  • Harold E. Marshall


We introduced the concept of the time value of money in Part 1 and showed basic discounting operations in the method formulas. Here we explain why, for a valid economic evaluation, it is necessary to discount dollar amounts which occur at different times to time-equivalent amounts at a common time. We discuss the implications of discounting for building decisions. Then we explain how to do it. We begin the “how to” part with guidelines for selecting a common time and modeling cash flows. Then we show how to discount a variety of cash flows with eight time-equivalence formulas. Because discounting operations are often combined with cost estimation, we show how to combine the two.1


Discount Rate Cash Flow Present Amount Annual Interest Rate Capital Investment Decision 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. American Society for Testing and Materials (ASTM). 1988. Discount Factor Table; Adjunct to Standard Practice for Measuring Life-Cycle Costs of Buildings and Building Systems. E 917. Philadelphia: ASTM.Google Scholar
  2. Au, Tung, and Thomas P. Au. 1983. Engineering Economics for Capital Investment Analysis. Newton, Massachusetts: Allyn and Bacon, Inc.Google Scholar
  3. Clark, J. J., T. J. Hindelang, and R. E. Pritchard. 1984. Capital Budgeting: Planning and Control of Capital Expenditures. Englewood Cliffs, New Jersey: Prentice-Hall, Inc.Google Scholar
  4. Grant, Eugene L., and W. Grant Ireson. 1982. Principles of Engineering Economy. New York: The Ronald Press Company.Google Scholar
  5. Lippiatt, Barbara C., and Rosalie T. Ruegg. 1988. Energy Prices and Discount Factors for Life-Cycle Cost Analysis. NISTIR 85–3273–3. Gaithersburg, Maryland: National Institute of Standards and Technology.Google Scholar
  6. Petersen, Stephen R. 1989. Discount Factor Tables for Life-Cycle Cost Analyses. NISTIR 89–4203. Gaithersburg, Maryland: National Institute of Standards and Technology.Google Scholar
  7. Ruegg, Rosalie T. 1989. Life-Cycle Costing for Energy Conservation in Buildings: Instructor’s Guide. NISTIR 89–4129. Gaithersburg, MD: National Institute of Standards and Technology.Google Scholar
  8. Weston, J. Fred, and Eugene F. Brigham. 1981. Managerial Finance. Hinsdale, Illinois: The Dryden Press.Google Scholar
  9. White, John A., Marvin H. Agee, and Kenneth E. Case. 1984. Principles of Engineering Economic Analysis. New York: John Wiley & Sons, Inc.Google Scholar

Copyright information

© Springer Science+Business Media New York 1990

Authors and Affiliations

  • Rosalie T. Ruegg
  • Harold E. Marshall

There are no affiliations available

Personalised recommendations