Question: 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:

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% peryear.

Year R&D NRI RU Maint Equip Po/D 0 5.5 1.1 3.5 2 2.5 3 0.5 5.2 1.3 0.6 1.5 3.6 0.5 3.1 1.4 10.5 4.2 6 5.3 6-10 11 on 18-20 6.5 2.7 2.2 3.5 2.7

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