To assist readers to gain a basic understanding of LCC, Table “LCC Calculation Method Compared with Conventional Investment Calculation Methods” presents a comparison of the LCC calculation method and conventional investment calculation methods. Figure “A Typical LCC Calculation” shows a typical LCC calculation.

LCC Calculation Method Compared with Conventional Investment Calculation Methods

Key

IC: Initial Cost (investment cost or acquisition cost)
OC: Operating Cost (cost of upkeep, ownership, operation, materials, labour, repairs, utilities, etc.)
CC: Cost of capital (depreciation, interest)
C: Total cost price
V: Added value (profit, interest, depreciation, human resources, tax and public charges, leasing fees)
D: depreciation
P: Profit = S-C
I: Interest
LCC: Life-Cycle Cost
S: Net sales revenue
ROI: return on investment

A Typical LCC Calculation

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