Network valuation Cost annualization All fixed line network elements identified during network dimensioning are revalued at Gross Replacement Cost (GRC). On the basis of GRC value, its annual CAPEX cost is being further calculated. In BU-LRIC model there are four alternative methods that are used to calculate annual CAPEX costs: Straight-line method; Annuity method; Tilted Annuity method; Economic depreciation method. Algorithms to calculate annual CAPEX cost (depreciation and ROI) using straight-line, annuity, tilted annuity and economic depreciation methods are described in the following sections. Straight-line method The annual CAPEX costs under the straight-line method are calculated according to the following formula: Where: - current depreciation (l useful life of an asset (data will be gathered from Operators); GRC – –gross replacement cost of an asset); , holding gain (loss); - cost of capital; Index - price index change (data will be gathered from Operators); NBV net book – GBV gross book value; – WACC - weighted average cost of capital. Annuity method The annual costs under the annuity method are calculated according to the following formula: Tilted annuity method The annual CAPEX costs under tilted annuity method are calculated according to the following formula: Economic depreciation method The economic depreciation algorithm involves a cash-flow analysis to answer the question: what time-series of
Network valuation Cost annualization All fixed line network elements identified during network dimensioning are revalued at Gross Replacement Cost (GRC). On the basis of GRC value, its annual CAPEX cost is being further calculated. In BU-LRIC model there are four alternative methods that are used to calculate annual CAPEX costs: Straight-line method; Annuity method; Tilted Annuity method; Economic depreciation method. Algorithms to calculate annual CAPEX cost (depreciation and ROI) using straight-line, annuity, tilted annuity and economic depreciation methods are described in the following sections. Straight-line method The annual CAPEX costs under the straight-line method are calculated according to the following formula: Where: - current depreciation (l – useful life of an asset (data will be gathered from Operators); GRC –gross replacement cost of an asset); , holding gain (loss); - cost of capital; Index - price index change (data will be gathered from Operators); NBV – net book GBV – gross book value; WACC - weighted average cost of capital. Annuity method The annual costs under the annuity method are calculated according to the following formula: Tilted annuity method The annual CAPEX costs under tilted annuity method are calculated according to the following formula: Economic depreciation method The economic depreciation algorithm involves a cash-flow analysis to answer the question: what time-series of
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