Recurring and Nonrecurring Costs.

Recurring costs refer to any expense that is known, anticipated, and occurs at regular intervals. Nonrecurring costs are one-of-a-kind expenses that occur at irregular intervals and thus are sometimes difficult to plan for or anticipate from a budgeting perspective.

Examples of recurring costs include those for resurfacing a highway and reshingling a roof. Annualexpenses formaintenance and operation are also recurring expenses.Examples of nonrecurring costs include the cost of installing a new machine (including any facility modifications required), the cost of augmenting equipment based on older technology to restore its usefulness, emergency maintenance expenses, and the disposal or close-down costs associatedwith ending operations.

In engineering economic analyses recurring costs aremodeled as cash flows that occur at regular intervals.(such as every year or every 5 years.) Their magnitude can be estimated, and they can be included in the overall analysis. Nonrecurring costs can be handled easily in our analysis if we are able to anticipate their timing and size. However, this is not always so easy to do.

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