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A life cycle cost economics model for projects with uniformly varying operating costsA mathematical model is developed for calculating the life cycle costs for a project where the operating costs increase or decrease in a linear manner with time. The life cycle cost is shown to be a function of the investment costs, initial operating costs, operating cost gradient, project life time, interest rate for capital and salvage value. The results show that the life cycle cost for a project can be grossly underestimated (or overestimated) if the operating costs increase (or decrease) uniformly over time rather than being constant as is often assumed in project economic evaluations. The following range of variables is examined: (1) project life from 2 to 30 years; (2) interest rate from 0 to 15 percent per year; and (3) operating cost gradient from 5 to 90 percent of the initial operating costs. A numerical example plus tables and graphs is given to help calculate project life cycle costs over a wide range of variables.
Document ID
19780007134
Document Type
Reprint (Version printed in journal)
Authors
Remer, D. S.
(Jet Propulsion Lab., California Inst. of Tech. Pasadena, CA, United States)
Date Acquired
August 9, 2013
Publication Date
June 15, 1977
Publication Information
Publication: The Deep Space Network, Vol. 39
Subject Category
Economics And Cost Analysis
Distribution Limits
Public
Copyright
Work of the US Gov. Public Use Permitted.

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