The Navy acknowledges that its proposal for leasing new cargo ships instead of buying them could end up costing twice as much, even after adjusting for inflation.

So how can the leasing program, known as Charter and Build, also claim to save money?

The argument hinges on an analysis of the value of money over time, a calculation known to economists as "net present value."

The theory is based on the idea that a dollar in hand today is more valuable than a dollar received in the future. That's mostly because today's dollar can be invested and earn a profitable return.

So, in any comparison between a lump-sum purchase and money spent over time on a lease, economists say, adjustments must be made to convert payments from different time periods into a common unit of measurement.

In the real world, thrifty consumers make a net-present-value analysis all the time, even if they don't realize it.

The Virginia Lottery, for example, allows winning players of its Lotto game to choose between a lump-sum award or annual payments over 25 years.

Those seeking the cash today, however, must settle for the net present value of whatever jackpot award was advertised.

A jackpot of $14 million, for instance, will amount to $14 million only if it is paid over 25 years. Those who want a lump-sum payment today would receive only about $7 million, said lottery spokesman Edward Scarborough. That is roughly the amount of money the Lottery needs on hand today that, when invested, will grow to the advertised $14 million prize in 25 years, he said.

At first glance, a Lotto winner might conclude that $14 million is better than $7 million, thereby opting for annual payments. But an analysis of net present value is required to accurately determine the greater reward.

The Lottery invests its revenues in U.S. Treasury bonds, which typically earn about 6 percent interest, Scarborough said. But if a player took the lump-sum payment of $7 million and invested it in stocks or other securities that yield a higher rate of return, he could end up earning far more than the advertised $14 million at the end of 25 years. But if those private investments end up earning less interest than the Lottery does, it would be more profitable to accept the annual payments.