You can take inflation rates into account over the time intervals to assess. If you specify interest rates for time intervals in the LCC Variables file, they are used to calculate the net present value NPV or cost of your system based on today’s currency. Knowing the NPV helps to determine if a particular cost would be better incurred this year or postponed until some future time when the cost might be lower.

The equations for NPV follow:

Where:

NPV = The net present value or present principal sum.

Fn = The equation result at time interval n.

In = The interest rate at time interval n.

The source of this NPV equation is Logistics Engineering and Management, Benjamin S. Blanchard, Fourth Edition, page 79, equation 2.46.