Cost of Facilities Capital (CFC)
Cost of Facilities Capital (CFC), which is not the same as interest charges, addresses the cost of money invested, whether the machinery is purchased with cash or financed.
CFC is calculated by the following formula:
{[(N-1) x (1+S) + 2] x CMR} / (2 x N) = CFC factor (CFC factor x P)/AH = Hourly CFC Cost
Where:
N = Economic life in years (Economic hours/Annual Hours)
S = Salvage value percentage
CMR = Cost of money rate (as set by the Treasury Department each January 1 and July 1)
P = Manufacturer’s List Price
CFC = Cost of facilities capital
AH = Annual hours
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