Life Cycle Cost Calculator
Compute life cycle cost using validated scientific equations. See step-by-step derivations, unit analysis, and reference values.
Reviewed by Daniel Agrici, Founder & Lead Developer
Formula
LCC = Acquisition + PV(Operating) + PV(Maintenance)
Life Cycle Cost equals initial acquisition plus present value of all recurring costs.
Worked Examples
Example 1: HVAC System
Problem:Acquisition: $80k. Operating: $12k/yr. Maintenance: $3k/yr. Discount: 5%. Life: 20 yr.
Solution:Recurring=$15k/yr\nPVAF=12.4622\nPV=$186,933\nLCC=$266,933\nEAC=$21,420/yr
Result:LCC: $266,933 | EAC: $21,420/yr
Example 2: Solar System
Problem:Acquisition: $25k. Operating: $200/yr. Maintenance: $500/yr. Discount: 4%. Life: 25 yr.
Solution:Recurring=$700/yr\nPV=$10,935\nLCC=$35,935\nEAC=$2,301/yr
Result:LCC: $35,935
Frequently Asked Questions
What is Life Cycle Cost Analysis?
Life Cycle Cost Analysis is a comprehensive economic evaluation that accounts for all costs of owning and operating an asset over its entire lifespan. It includes initial acquisition, ongoing operating expenses, maintenance and repair, all discounted to present value. LCCA enables decision-makers to compare alternatives with different upfront costs but varying long-term expenses to find the most cost-effective option.
How is the Life Cycle Cost formula applied?
LCC = Acquisition Cost + PV(Annual Operating) + PV(Annual Maintenance). Each future annual cost is divided by (1+r)^t where r is the discount rate and t is the year. The present value annuity factor converts uniform annual costs to a lump sum. This produces a single number representing total cost of ownership in present-day dollars for accurate comparison.
What is Equivalent Annual Cost?
Equivalent Annual Cost converts total life cycle cost into a uniform annual payment, making comparison of alternatives with different lifespans straightforward. It is calculated by dividing LCC by the present value annuity factor. EAC is particularly useful when comparing equipment that must be replaced at different intervals, providing a standardized annual cost metric for decision-making.
References
Reviewed by Daniel Agrici, Founder & Lead Developer · Editorial policy