To compare public capital costs with the three other cost categories, we annualized all capital expenditures.  The approach, adapted from Delucchi and Murphy (1998), utilizes the replacement value of capital infrastructure such as school buses, entrance drives, parking lots and sidewalks, converted into an equivalency of annual costs over the life of the capital using a social discount rate. For this analysis, we presumed that the total initial capital investment was equal to the net replacement value, the life of the capital investment was 20 years (t) and the social discount rate was 3.5% (i) (White House Office of Management and Budget, 2003).  Annualized capital costs (ACC) were calculating using the following formula:

By using a total initial capital investment estimate for Net Replacement Value (NRV) that includes school site transportation infrastructure construction and school bus acquisition, our approach accounts for depreciation of capital investments.  Correspondingly, we do not include separate depreciation costs for infrastructure or school buses as line items elsewhere.