ABSTRACT
The two major cost elements for any asset are Initial Cost (i.e., CAPEX) and Operation and Maintenance (i.e., OPEX). Calculation of these cost elements is one of the basic steps of Life Cycle Cost Analysis. This chapter explains the five simple steps for computation of Life Cycle Cost Analysis. These steps are determination of life cycle, valuation of each cost element, calculation of the present value of each element, calculation of Life Cycle Cost, and analysis of the results. This chapter provides the fundamental concept of inflation rate, discount rate, and present value. An innovative formula for calculating present value and its application has also been explained in this chapter.
