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Reinvestment
Formulas & Models


Over the past few decades,
particularly since the 1950s, a
number of different formulas models have been developed in an effort to
derive a
reinvestment rate
for major maintenance
and renewal costs at
different stages in the facility
lifecycle. Expense Quantification Formulas The alternative formulas to determine the capital load can be classified into two broad classes: a) topdown formulas and b) bottomup formulas. They ask the question: "How much money will we need?". These models form part of the expenditure plan in the financial analysis. Reinvestment formulas can be grouped into three general categories, as follows: Group 1:
Funding Allocation Models Listed below are two groups of funding models that are used once the expenditures (capital load) has been quantified. In other words, they ask the question: "How much money will we have?". They are a method of seeking equilibrium. Group 1: Group 2: Group 3: 
Fig. Relationship between a) How Much Money will we Need? and b) How much money will we have? 


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