Life Cycle Costing

Life Cycle Costing

Table of Contents

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Topics Page

Executive Summary 3

Introduction 4

Assumptions 5

List of Costs 6

Sources for all items 7

Treatment of depreciation 9

Use of NPV process 10

Discount rate 10

Commentary and Recommendation 11

References 12

Executive Summary

Life Cycle Costing (LCC) is “a process to determine the sum of all expenses associated with a product or project, including acquisition, installation, operation, maintenance, refurbishment, discarding, and disposal costs” (SA 1999). It is used to select the best product or project by determining the overall costs (initial capital costs and future ownership costs) over a specified time period.

In this assignment, I will be planning to purchase a new car to go for work so that I do not have to share the car with friends to office. I have selected 2 models of car for me to choose. By using the Net Present Value (NPV) method in LCC analysis, I am able to decide the car I wish to buy at the end.

Introduction

I intend to purchase a new car for working purpose with short-medium distance drive. My budget will be up to RM65,000, and I will purchase the car by paying cash. I prefer to drive the car with manual transmission and small displacement, 1300cc. Hence, Perodua Myvi and Toyota Avanza are selected for my consideration. The specifications of the two car models are as following:

Car Model | Perodua Myvi (1.3L SXi) | Toyota Avanza (1.3E) |

Car Type | Compact | MPV(Multi-Purpose Vehicle) |

Transmission Type | Manual (5 speed) | Manual (5 speed) |

Displacement (cc) | 1300 | 1300 |

Seating Capacity (passengers) | 5 | 7 |

Fuel Tank Capacity (litres) | 40 | 45 |

SRS Airbags | Yes | No |

ABS systems | Yes | No |

Alarm & Immobiliser | Yes | Yes |

Colour Type | Metallic | Metallic |

Based on the...