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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.
Year
R&D
NRI
RU
Maint
Equip
PoD
0
5.5
1.1
1
3.5
2
2.5
3
0.5
5
0.6
1.5
4
11
1.4
3.6
10.5
4.2
1.6
5.3
6-10
$7
2.7
7.8
11 on
8.5
18-20
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