(August 13, 2026 @ 6pm ET) 40 Minutes of Competence Study Session: Life-Cycle Cost Calculations

This week's Amber Book: 40 Minutes of Competence program is titled, “Life-Cycle Cost Calculations”

 

These study sessions are free and open to all, not just Amber Book subscribers, so join us this Thursday at 6pm ET: https://us02web.zoom.us/j/83922907346

 

You’ll take the first five minutes of class to answer this week's question alone, but if you would like to get a head-start on that, here is the assignment:

An architect is comparing the life-cycle cost of two mechanical system alternatives for a new office building. System A has a first cost of $1.2 million and projected annual operating costs of $85,000. System B has a first cost of $1.8 million and projected annual operating costs of $55,000. The client's project horizon is 20 years.

Which system offers the lower life-cycle cost over 20 years, and approximately how many years does it take for the higher first-cost system to break even?

A. System A has the lower life-cycle cost; System B never breaks even within the 20-year horizon.

B. The two systems have equal life-cycle costs over 20 years; System B's savings exactly offset its higher first cost at the 20-year mark.

C. System B has the lower life-cycle cost; System B breaks even in 10 years.

D. System A has the lower life-cycle cost; System B breaks even in 12 years.