A manufacturing software engineer at a major aero­space corporation has been assigned the management responsibility of a project to design, build, test, and implement AREMSS, a new-generation automated scheduling system for routine and expedited mainte­nance. Reports on the disposition of each service will also be entered by field personnel, then filed and ar­chived by the system. The initial application will be on existing Air Force in-flight refueling aircraft. The system is expected to be widely used over time for other aircraft maintenance scheduling. Once fully implemented, enhancements will have to be made, but the system is expected to serve as a worldwide scheduler for up to 15,000 separate aircraft. The engi­neer, who must make a presentation next week of the best estimates

Question

of costs over a 20-year life period, has decided to use the life-cycle cost approach of cost es­timation. Use the following information to determine the current annual LCC at 6% per year for the AREMSS scheduling system.

Answer 1

PW of LCC = – 2.6(P/F,6%,1) – 2.0(P/F,6%,2) – 7.5(P/F,6%,3) – 10.0(P/F,6%,4)
-6.3(P/F,6%,5) – 1.36(P/A,6%,15)(P/F,6%,5) -3.0(P/F,6%,10)
- 3.7(P/F,6%,18)
= – 2.6(0.9434) – 2.0(0.8900) – 7.5(0.8396) – 10.0(0.7921) -6.3(0.7473)
– 1.36(9.7122)(0.7473) -3.0(0.5584) - 3.7(0.3503)
= $-36,000,921

AW of LCC = -36,000,921(A/P,6%,20)
= -36,000,921(0.08718)
= $-3,138,560