Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 45

The Pentagon asked a defense contractor to estimate the life-cycle cost for a proposed light-duty support vehicle. The list of items included the following categories: R D costs (R D), nonrecurring investment costs (NRI), recurring upgrade costs (RU), scheduled and unscheduled maintenance costs (Maint), equipment usage costs (Equip), and phaseout/disposal costs (Po/D). Use the cost estimates (shown in $1 million) for the 20-year life cycle to calculate the annual LCC at an interest rate of 7% per year.