Life Cycle Cost Calculator
Click here to get more Free Online Business Calculators.
Click here for more Operations and Production Calculators.
Quick Guide to Using the Life Cycle Cost Calculator
- Choose the currency you want to use for calculations from the dropdown menu.
- Input the initial cost of the product or equipment you want to evaluate.
- Enter the annual savings in energy costs generated by the equipment.
- Input the annual reduction in maintenance costs attributed to the equipment.
- Enter the discount rate in percentage, typically the cost of capital or desired rate of return.
- Specify the expected lifespan of the equipment.
- After filling in all fields, click on the “Calculate” button to get results.
Formula
LCC = IC + ESPWF ( COST energy + COSR maint)
Where
LCC = life cycle cost
IC= initial cost
ESPWF = Equal series present worth factor
COSTenegy = yearly energy cost saving
COSR MAINT = yearly maintenance cost reduction
ESPWF = { [ (1+d) ^n] – 1/ [ d ( 1+d)^n]}
Where d = discount rate in percent
n = lifetime in years
What is Life Cycle Cost?
Life cycle cost refers to the total cost of owning, operating, and maintaining equipment over its entire lifespan, including initial costs, operating expenses, maintenance costs, and any other relevant expenses.
Who Can Use LCC Calculator?
This calculator is beneficial for individuals, businesses, engineers, project managers, and financial analysts who need to assess the economic viability of investments in equipment over their lifecycle.
Which Industries Can Use This Calculator?
Industries spanning from manufacturing, construction, energy, and transportation, to facilities management can utilize this calculator to evaluate the life cycle costs of equipment and machinery.
Benefits of Using This Calculator
- Helps in making informed decisions by considering the total cost of ownership.
- Enables comparison between different equipment based on their life cycle costs.
- Assists in budgeting and financial planning for long-term investments.
- Supports sustainability efforts by identifying energy-efficient and cost-effective solutions.
FAQS
How is the discount rate determined?
The discount rate is usually based on the organization’s cost of capital or the desired rate of return on investment.
What is the Equal Series Present Worth Factor (ESPWF)?
The Equal Series Present Worth Factor (ESPWF) is a financial metric used in investment analysis and capital budgeting. It represents the present value of a series of equal cash flows occurring at regular intervals over a specified time period, discounted back to their present value at a given discount rate.
Can I change the currency after calculations?
No, the currency selection is fixed for each calculation. You need to reset and select a different currency if required.
Conclusion
The Life Cycle Cost Calculator provides a straightforward tool to evaluate the total cost of owning and operating an equipment over its lifetime.
