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Life cycle costing compares alternatives on the

  • A.residual value at the end of their lives
  • B.total cost of owning and running them over their lives
  • C.purchase price alone
  • D.annual running cost alone

Answer: B

Correct answer: total cost of owning and running them over their lives

Life cycle costing adds the capital, the running costs, the maintenance and the disposal over the whole life, discounted to a common basis. It exists because the cheapest option to buy is frequently the dearest to own - which comparison on purchase price alone conceals.

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