Some New Mathematical Aspects of Fixed Charges

This paper contains a mathematical demonstration of some new aspects of Fixed Charges comprised of three most significant and interrelated components, namely: return, depreciation, and taxes which depend directly on such return and on the treatment accorded depreciation in their computations. Such mathematical demonstration is culminated in a set of new general formulas for determining levelized annual Fixed Charges. They are compared with formulas established by the conventional technique, demonstrating that such formulas in general are only good approximations of theoretical considerations, and that under certain conditions of investment growth laws they do not provide results with acceptable engineering accuracies. A simplified set of formulas is suggested for the calculation of Fixed Charges for everyday use in a great majority of cases. In conclusion, as a result of the mathematical investigations, it is pointed out that there could be other aspects of this problem which may require further explorations and that such additional studies might show other necessary modifications to the conventional technique.