Pollution Permit Bank Carry Cost Term Tool

Description

Return presentFutureValue = permits*futurePrice/(1+annualRate)^years and netCarryValue = presentFutureValue-permits*currentPrice-storageCost.

Discounting expresses a future amount on a chosen present-value basis. The rate must match the period and compounding convention, while the currency price year and the choice of social or private discount rate remain separate assumptions.

Return presentFutureValue = permits*futurePrice/(1+annualRate)^years and netCarryValue = presentFutureValue-permits*currentPrice-storageCost.

When to use this tool

Use Pollution Permit Bank Carry Cost Term when checking one supplied discount, accrual or carry-value contribution.

How to use the tool and how it works

Enter permits, currentPrice, futurePrice, annualRate, years, storageCost. Use the units and conventions below.
Run the tool. Correct any format, range, or cross-field input error before interpreting the output.
Read presentFutureValue, netCarryValue. Use the output convention below.

Require nonnegative permits and storageCost, annualRate > -1 and years >= 0. Return presentFutureValue = permits*futurePrice/(1+annualRate)^years and netCarryValue = presentFutureValue-permits*currentPrice-storageCost.^[1]

Input field	Meaning and units	Accepted input
permits	Permits	Required. Finite number; minimum 0.
currentPrice	Current Price	Required. Finite number.
futurePrice	Future Price	Required. Finite number.
annualRate	Effective annual rate as a fraction, for example 0.03 for 3%.	Required. Finite number; strictly above -1.
years	Elapsed years matching the annual effective rate, possibly fractional.	Required. Finite number; minimum 0.
storageCost	Present-valued total storage cost in the same currency as the discounted proceeds.	Required. Finite number; minimum 0.

Output field	Interpretation	Returned shape
presentFutureValue	Present Future Value	Required. Finite number.
netCarryValue	Net Carry Value	Required. Finite number.

json

{
  "input": {
    "permits": 100,
    "currentPrice": 10,
    "futurePrice": 12,
    "annualRate": 0.1,
    "years": 1,
    "storageCost": 20
  },
  "output": {
    "presentFutureValue": 1090.9090909090908,
    "netCarryValue": 70.90909090909076
  }
}

Limitations and assumptions

Prices share one currency per permit and annualRate is an effective fraction. storageCost is deducted as a present-valued amount; permit validity, borrowing rules, uncertainty and actual trading opportunities are not established.
Inputs must satisfy both the field types and the cross-field conditions above. Invalid input causes an error; a successful false flag or documented placeholder is a different result.
Numeric calculations use binary floating point unless exact decimal-integer arithmetic is explicitly stated. No hidden measurement tolerance or decimal rounding is added; nonfinite or out-of-contract results are rejected. Numeric signed-zero results are exported as zero.

Alternative or Complementary methods

Use a justified rate convention and complete cashflow schedule, including uncertainty and timing, when evaluating a real policy or investment.

References

Calculation and input contract: environmental-economics/pollution-permit-bank-carry-cost-term — tool.io

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