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Discounting is applied in a life cycle cost analysis because

  • A.Inflation always reduces costs
  • B.Maintenance costs fall with age
  • C.Aircraft depreciate linearly
  • D.Future money is worth less than money today

Answer: D

A cost twenty years away has less present value than the same cost today, so future expenditure is discounted before being added in. The discount rate chosen has a very large effect on the answer and is always stated with it.

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