IS 13174-2: Life cycle costing, Part 2: Methodology

22 Pages·1994·2.1 MB·English

by  Bureau of Indian Standards

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IS 13174-2 (1994): Life cycle costing, Part 2: Methodology
[MSD 4: Management and Productivity]
“!ान $ एक न’ भारत का +नम-ण”
Satyanarayan Gangaram Pitroda
““IInnvveenntt aa NNeeww IInnddiiaa UUssiinngg KKnnoowwlleeddggee””
“!ान एक ऐसा खजाना > जो कभी च0राया नहB जा सकता हहहहै””ै”
Bhartṛhari—Nītiśatakam
“Knowledge is such a treasure which cannot be stolen”

Indian Standard
LTFECYCLECOSTING
PART 2 METHODOLOGY
UDC 657-471.1-015

Q BIS 1994
.
BUREAU OF INDIAN STANDARDS
MANAK BHAVAN, 9 BAHADUR SHAH ZAFAR MARG
NEW DELHI 110002
August 1994 Price Group 7
tnemeganaM and ytivitcudorP lanoitceS ,eettimmoC MS~D 4
FOREWORD
sihT naidnT dradnatS was detpoda yb eht uaeruB fo naidnI Standards, retfa eht tfard dezilanif yb eht
tnemeganaM and ytivitcudorP lanoitceS ,eettimmoC had neeb devorppa yb eht tnemeganaM and
smetsyS noisiviD .licnuoC
With reve gnisaercni stnemtsevni htob yb yrtsudni and tnemnrevoG rehtegot htiw snoitacilpmoc fo eht
suounitnoc noisolpxe ni ,ygolonhcet elbaredisnoc noitalfni ni tsoc fo ,slairetam ,ruobal ,ygrene cte and
eht gnignahc lanoitanretni and lanoitan ,stnemnorivne snoisiced desab no, laitini stsoc evah netfo
devorp ot eb evitcudorp-retnuoc and .lacimonocenu nI ,ralucitrap erehw cilbup yenom is ,devlovni ti
semoceb yrassecen ot erusne eht mumixam stifeneb tuo fo yreve .tnemtsevni nI this ,noitautis a
citametsys ygolodohtem rof assessing eht latot tsoc fo an asset ro desoporp tnemtsevni revo its eritne
gnitarepo ,efil ylralucitrap ot etauqe suoirav seciohc nepo ot eht noisiced making ,ytirohtua semoceb
.laitnesse
efiL elcyc gnitsoc is a dohtem ot evirra at hcus an cimonoce elbatiuqe assessment fo gnitepmoc ngised
.sevitanretla tI sekat otni tnuocca yreve tnacifingis tnemele fo tsoc revo eht efil fo eht asset and walks
tuo its latot tsoc and stifeneb revo eritne-sti cimonoce .efil
cimonocE efil is dediced ni laudividni sesac yb eht efil elcyc gnitsoc maet ni an noitazinagro taking
otni tnuocca rieht nwo ,ecneirepxe ecneirepxe fo srehto using emas ro ralimis ,tnempiuqe stnemmoc fo
eht ,sreilppus etats fo eht ,ygolonhcet secnahc fo ecnecselosbo .cte
tI is ylevitanretla elbissop ot ediced nosirapmoc fo efil elcyc tsoc ( CCL ) ylno no 5, 10 ro 15 sraey
hcihw tnemeganam sredisnoc etauqeda rof nosirapmoc ,sesoprup neve hguoht eht asset yam evah
cimonoce esu eulav raf dnoyeb that .etad nI rehto ,sdrow yeht evah eht noitpo ot maintain efil as dexif
rof all eht sevitanretla and neht etaluclac eht CCL fo hcae evitanretla rof that .efil
ehT noitaluclac fo eht efil elcyc tsoc rof eht efil fo an asset gnideecxe 20 sraey lliw eb decaf htiw eht
elbativeni seitniatrecnu gnidrager eht lautca efil fo eht asset, its seilbmessa-bus and osla eht elbativeni
segnahc ni stsoc and secirp fo ,ecnanetniam ,noitarepo ruobal and ynam rehto inputs. ehl risks and
seitniatrecnu ni eseht srotcaf nac eb decuder revewoh yb noitalumis sesicrexe and ytivitisnes seiduts
using a .retupmoc hcuS serudecorp era degaruocne elihw using this standard ton ylno rof gnivirra at
eht CCL tub osla rof eht eulav secidni and a nosirapmoc foereht erofeb lanif snoisiced era .edam
sihT standard seod ton edulcni sdohtem rof gnirusaem eht ecnamrofrep rof tnereffid ngised ,seciohc
stnempiuqe ro snoitpo rof .tnemtsevni fI nosirapmoc fo ecnamrofrep siv-a-siv latot efil elcyc ,stsoc

that is, eht eulav xedni is thguos ot eb devirra at, this standard lliw pleh ot etaluclac eht rotanimoned
.ylno tI is desivda that sresu fo~ this standard dluohs esu rieht nwo sdohtem rof assessing the
.ecnamrofrep
neviG lauqe slevel fo ,ecnamrofrep eht CCL nosirapmoc lliw flesti elbane eht snoisiced
b&g made.
fo ecnamrofrep ,yrav eht CCL seuqinhcet lliw eb elba ot etaler eht latot efil elcyc stsoc ot
Where levels
elbaifitnedi units fo ecnamrofrep ni hcus a yaw as ot elbane mumitpo .snoisiced
nevE retfa a noisiced is nekat at eht laitini tnemtsevni egats ro ,ngised lareves snoitpo llits tsixe rof esu
gnirud eht laitini sraey ro ylrae stages fo eht asset’s .efil tI is elbissop ot weiver eht suoirav _rofrep
ecnam ro tsoc sretemarap siv-a-siv ynam and tneuqerf segnahc ni ,ygolonhcet tupni stsoc and secirp
,cte and etaulave-er eht eulav xedni rof eht dlo as llew as wen snoitpo that evah emoceb .elbaliava nI
hcus a ,esac eht egasu fo this standard rehtegot htiw a eulav xedni noitamitse and nosirapmoc lliw llits
elbane ,wen spahrep lacidar snoisiced gnieb edam neve fi ti yam naem gniunitnocsid trap ro elohw fo
hcus assets and gnicalper meht yb a wen ygolonhcet .rehtegotla elihW this yam eb an emertxe p~ssl_
,ytilib ti is yb on snaem .erar ynaM doog~lufesu eulav level-mmdem segnahc ni noitarepo and _etniam
ecnan lliw eb dnuof evitcartta yb gnizilitu eht sdohtem tes tuo ni this standard.
nI gnitroper eht stluser fo a tset ro sisylana edam ni ecnadrocca htiw siht ,dradnats fi eht lanif eulav
devresbo ro ,detaluclac is ot eb dednuor ti shall eb enod ni ecnadrocca htiw SI 2 : 0691 seluR‘ &f
off,
gnidnuor ffo laciremun seulav (
revisrd )‘.
IS 13174( h-t 2 ) : 1994
Indian Standard
LIFECYCLECOSTING
PART 2 METHODOLOGY
1 EPOCS Alternutive I - eunitnoC the gnitsixe nepo hearth
leets gnikam process tuohtiw yna .egnahc
sihT dradnats sebircserp the ygolodohtem ot work tuo
Alternative II - yuB the LD process of gnikam leets
the efil elcyc cost (LCC) for each evitanretla dna osla
htiw gnivah a retrevnoc yticapac of 70 seirnot per
sdohtem ot erapmoc the efil elcyc costs for tnereffid
heat.
.sevitanretla ehT two sdohtem debircsed ni siht -dnats
ard ot etaluclac CCL are tneserP htroW Method )WP( Afternative III - yuB a tsetal noisrev of the LD
dna desilaunnA tsoC Method .)CA( process gnisu a retrevnoc of 155 sennot per heat.
Alternative IV - yuB a regral nepo hearth tnalp
2 SECNEREFER elbaliava dnah-dnoces at a rewol laitini cost dna
ecalper ti htiw a wen LD process ni the htfif raey
ehT gniwollof naidnI dradnatS si yrassecen tcnujda ot
nehw etauqeda sdnuf lliw eb .elbaliava
siht :dradnats
roF evitartsulli ,sesoprup ti si demussa that the lluf
SI No. Title
yticapac ni each of the evoba cases lliw eb elbaliava ni
13174 efiL elcyc gnitsoc : Part 1 -reT the yrev tsrif raey .flesti
(Part 1) : 1991 ygolonim
51.1 The nwonk data ni respect of these ruof -ametI*
3 YGOLONIMRET sevit si nevig ni elbaT 1.
roF the esoprup of siht ,dradnats the snoitinifed nevig 5.2 tneserP htroW Method
ni SI 13174 (Part 1) : 1991 llahs .ylppa
elbaT 2 sevig the efil elcyc cost for each of the ruof
4 NOITACILPPA YGOLODOHTEM sevitanretla yb tneserP htroW )WP( sihT.dohtem elbat has
neeb deniatbo morf elbaT 1 yb gnisu the gniwollof steps.
4.1 ehT two ,sdohtem htob yllauqe :elbacilppa yam eb
dewollof for gnitaluclac efil elcyc cost. enO ,dohtem 5.2.1 kcolB I of elbaT 2 shows the latot laitini cost,
nwonk as tneserP htroW )WP( ,dohtem strevnoc lla the hcihw si the emas as nevig ni elbaT 1. sihT latot laitini
costs ot the tneserp .seulav ehT other ,dohtem nwonk
cost si yllausu derrucni nihtiw a emit naps of few
as desilaunnA tsoC )CA( ,dohtem sesitromma lla costs shtnom ot few .sraey
revo the efil of the meti or .tcejorp htoB the sdohtem

are yllacitemhtira .lacitnedi hcihW dohtem ot choose 5.2.2
lliw dneped nopu the ygolohcysp of tnemeganam ni
rieht esnopser ot the detcejorp deen for sdnuf dna the a) kcolB II stsisnoc of suoirav elgnis skcolb-bus of
,erutidnepxe hcus as, rojam ecnanetniam
sevitcejbo of the CCL maet ot niw tnemeganam -pa
eludehcs at elbaeeserof ,sdoirep for ,elpmaxe 5,
lavorp ot sti .loitadnelalnocer fI tnemeganam are ssel
51,ol dna 20 .sraey ecniS these evlovni -nepxe
neek no erutuf lautca cost, the WP dohtem dluohs eb
erutid at tnereffid sdoirep of ,emit yeht evah ot
preferred. ehT tneserp worth dohtem lliw osla -mocer
eb deilpitlum yb tneserP htroW srotcaF (pwf)
dnem flesti where the rate of ecnecselosbo si yrev hgih
for gnitrevnoc these seulav ot tneserp worth. roF
nihtiw a short doirep yas( 5 ot 10 .)raey erehW there si
on rojam ytluciffid ni gnidnif the sdnuf for laitini -ni detceles seulav of tnuocsid rate (i) dna rebmun
of sraey (t), the seulav of pwf a re nevig ni xennA
,tnemtsev the ssenevitcartta of erutuf sgnivas ni the
.A roF other noitanibmoc of tnuocsid rate dna
mrof of laultna costs yam evorp the CA dohtem ot eb
rebmun of ,sraey pwf yam eb detaluclac yb
.suoegatnavda
gnisu the gniwollof :noisserpxe
4.2 ehT noitaluclac of efil elcyc cost yb htob the
sdohtem si detartsulli htiw the pleh of .selpmaxe PW Fuctor (pwf) = (1 + 0.01 x -)i *
where
5 ELPMAXE MORF LEETS YRTSJIDNI i = tnuocsid rate per ,munna dna
t = rebmun of .sraey
5.1 A leets ynapmoc si gnivah ruof sevitanretla for
gnicudorp .leets ehT ynapmoc si detseretni ni gnitceles roF ,elpmaxe for i = 12% dna t = 5, 10, 1.5 dna
20 ,sraey WP factors are 0.567 4, a.322 0,
the evitanretla hcihw lliw evig the muminim efil elcyc
0.182 7 dna 0.103 7 ylevitcepser (see xennA
cost per ennot of .noitcudorp ehT ruof sevitanretla are
as :swoIIof .)A
1
SI 13174 ( Part 2 ) : 1994
Table 1 Data for Steel Industry
(Clnrtse 5.1.1 )
Zl Item Alternative Alternative Alternative Alternative
No. I II III IV
1. Total initial cost (in million rupees) 367.0 1 887.0 8 434.0 885.0
2. Production capacity (Average million 0.28 1.23 1.383 2.25
tonnes per year)
3. Operating and maintenance cost per year 1 041.0 4 023.0 3 213.0 5 625.0
(in million rupees)
4. Expected salvage value at the end of the 36.7 188.7 421.7 674.3
20th year (in million rupees)
5. Economic life 20 years 20 years ?,O_years 20 years
6. Recurring annual expenses for years 1 to 4 840.0
( in million rupees)
7. Single expenditure due to capital repairs at
’
theendof
- 5th year 140.0 700.0 -Nil 14 100.0
- 10th year 20.0 100.0 Nil Nil
- 15th year 30.0 150.0 Nil Nil
8. Rate of escalation for maintenance and 5% per year 5% per year 5% per year 5% per year
operating costs
9. Discount Rate 12% 12% 12% 12%
)b erehT nac eb gnirrucer launna sesnepxe tub ton .detcartbus
for the elohw efil rednu yduts (for ,elpmaxe d) ddA lla the tneserp worth seulav ni kcolB II ot
sraey 1 ot 4). nI elbaT 1, for evitanretla ,VI ti si get .latot
denoitnem that na erutidnepxe‘ of sR 840 -lim
5.2.3 kcolB III setacidni the launna costs of -niam
snoil si detamitse ot eb derrucni yreve raey for
,ecnanet ,noitarepo ,ygrene gniffatslruobal dna -noc
the tsrif ruof .sraey ,eroferehT siht erutidnepxe .selbamus sihT launna cost si ot yb~deilpitlum~eb fwpu
for each raey has ot eb decuder ot tneserp worth (see xennA B) ot get rieht tnelaviuqe tneserp worth. roF

yb gniylpitlum evitcepser pwf ( for sraey 1,2,3 ,elpmaxe for =ni 12% dna t = 20 ,sraey fwpu = 7.469 4.
dna 4 ) htiw sR 840 snoillim dna .gnidda~neht
ylevitanretlA eno nac esu mrofinU tneserP 5.2.4 ehT seulav of skcolB ,I II dna III are added ot
htroW srotcaF )fwpu( nevig ni xennA .B roF evirra at the efil elcyc ees(~tsoc kcolB .)VI
,elpmaxe morf xennA ,B the eulav of fwpu for
5.2.5 kcolB V sevig the noitcudorp yticapac for each
tnuocsid rate )I( = 12% dna rebmun of sraey (2)
of the sevitanretla dna si nekat morf elbaT 1.
= 4 sraey si nevig as 3.037 3. ,eroferehT the latot
tneserp worth would eb sR 840 snoillim X 5.2.6 kcolB IV* shows efil elcyc cost per ennot of
3.037 3 = sR 2 551 .snoillim tI si nwohs elbaTni .noitcudorp sihT si deniatbo as the oitar of the efil
2 for evitanretla .VI roF other snoitanibmoc of i elcyc cost kcolB( )VI ot the noitcudorp yticapac
dna ,I the seulav of fwpu yam eb deniatbo morf kcolB( V).
the gniwollof :noisserpxe
5.2.7 kcolB IIV sevig the ecnereffid of the CCL per
=fwpu l(b )’b-
ennot of noitcudorp for the evitanretla morf the -inim
)b-1( .mum
where
5.3 Annualised Cost Method
1
h = ( 1 + 0.01 x )i 5.3.1 In siht ,dohtem lla smeti of erutidnepxe lliw eb
desilaunna orspread revo the efil of the lessa .ylmrofinu
c) ehT noitazilaer of lasopsid/egavlas at the dne of revenehW launna smeti of erutidnepxe are nwonk ot cb
the efil of the asset (see elbaT 1) lliw osla evah mrofinu revo the eritne ,efil these lliw eriuqer on -aretla
ot eb decuder ot sti tneserp worth yb gniylpitlum snoit dna nac eb nettirw as .hcus ehT laitini cost, the
the tnuoma htiw the gnidnopserroc factor nevig elgnis smeti of rojam laudividni sesnepxe dna the lautca
ni xennA .A sihT eulav has neeb nwohs ni gnirrucer sesnepxe hcihw are ton mrofinu tuohguorht
,tekcarb gnitacidni that siht eulav has ot eb the ,efil lliw lla evah ot eb tsif detnuocsid tneserp-ot

2
SI L3174 ( Part 2 ) : 1994
elbaT 2 efiL elcyC tsoC (In Million Rupees) -Present Worth Method
(Clausrs 5.2 aid 5.2.1)
-r -l -l -r
BIIX Item blA evital I L ev 11 L anretlA ‘e III m-hA ?u VI
E amits det tneserP detamitsE tneserP detamitnI tneserP detamitL tneser?
- Cost htroW tsoC htroW CO9 htroW Cost htroW
1 laiti%
lator laitini tsoc 0.763 0.763 1 0.788 1 0.788 8 0.434 8 0.434 0.588 0.58S
II egavlaS dna elgnis
erutidnepx: :
raeY 1 ot ry/O48,4 0.048 ! 0.155
x fwpu 730.3( )3
raeY ,5 tmA x fwp 0.041 4.97 0.007 2.793 4 0.ool 3 3.000
rof( elpmaxe 041
x 765.0 )4
raeY ,01 tmA x 0.02 4.6 0.001 2.23
fw rof( elpmaxe
0:r- x 223.0 )0
raeY ,51 tmA x 0.03 5.5 0.051 4.72
fwp rof( elpmaxe
03 x 281.0 )7
raeY ,02 tmA x )7.63( )8.3( )7.881( )6.91( )7.124( )7.34( )3.476( )9.96(
fwp rof( elpmaxe
7.63 x 301.0 )7
latoT 5.78 2.734 )7.34( 01 4.184
III launnA stsoc
launnA noitarepo 1 0.140 7 6.577 4 0.320 03 4.940 3 0.312 32 2.999 5 526 o. 24 4.510
dna ecnanetniam
,stsoc inuomA x
fwpu
rof( elpmaxe 1 140
x 964.7 )4
IV efiL elcyc tsoc 8 1.032 23 6.373 23 5.983 35 0.183
V noitcudorP yticapac u.0 3 33.1 83.1 52.2
VI ennoT/tsoC 10 92 0.393 62 0.023 32 0.024 32 0.527
noitcudorp
VII ecnereffiD ni 5 0.379 2 0.009 0 0.503
ennot/tsoc tnorf
muminiM -
-
L

:n&&noC evitanretlA III si erom tsoc .suoegatnavda

* ETON - ehT laitini tsoc sah been assumed, for illustration purposes, as gnivah spent in the first year, in actual prac.tice, this may be spread
over several years. In vjhich case the expenditure ni hcae raey lliw evah ot eb detnuocsid .ylbatius
worth seulav yb gnisu the elbacilppa WP factors (see rof,elpmaxe efil of 20 sraey at 12% tnuocsid
xennA .)A ,retfaerehT lla the tneserp worth seulav l&v fwpu,etar = 7.469 4. ,eroferehT FA = fwpu/l =
eb dellatat dna desilaunna revo the eritne efil ot evirra 0.133 9.
at the evitarapmoc desilaunna cost of the tnereffid -la kcolB III (c) shows the launna cost of noitarepo
.sevitanret elbaT 3 sevig the efil elcyc cost, for each of dna ecnanetniam hcihw si nekat morf elbaT 1
the ruof sevitanretla gnisu desilaunna cost .dohtem sihT dna dluow niamer emas for 1?a fh‘e 20 sraey of
elbat has neeb deniatbo morf elbaT 1 yb gnisu the
efil for lla the 4 .sevitanretla esehT serugif
gniwollof :spets
eriuqer on .egnahc
a) skcolB I dna II of elbaT 3 are deniatbo ni the kcolB VI shows the latot desilaunna cost dna si
emas yaw as for the tneserp worth dohtem (see
deniatbo yb gnidda the seulav for skcolB III (a),
5.2.1 dna 52.2). III )b( dna III (c).
)b kcolB III (a) dna III )b( show the latot laitini cost kcolB V sebig the noitcudorp yticapar for each
dna egavlas dna elgnis erutidnepxe cost -na of the sevitanretla si~dna nekat morf elbaT 1.
desilaun revo the eirtne efil yb gnisu the -pa
kcolB IV shows the tsoc‘desilaunna per ennot of
etairporp noitasitroninta factors .)FA(
noitcudorp dna si deniatbo yb gnidivid the latot
noitasitrommA factors are deniatbo as
desilaunna cost kcolB( )VI yb .’noitcudorp
slacorpicer of fwpu nevig ni xennA .B roF
yticapac kcolB( V). I(
3
IS 13174 ( Part 2 ) : 1994
Table 3 Life Cycle Cost (In Million Rupees) - Anuualised Cost Method
(Close 5.3 )
r r r
I
Alternative I Ntemative II Alternative III Alternative IV
Ektimatcd Present Estimated Present Estimated Present Stnated Present
(‘OS1 Worth Cost Worth Cost Worth Cost Worth
I ‘Initial
I&al initial cosl 3~ 67.0 367.0 I 887.0 1 887.0 8 434.0 8 434.0 885.0 885.0
II Salvage and Single
Expenditure
~
Year 1 to 4,840 x 840.0 2 551.0
upwf (3.037 3)
Ykr 5. Amt X pwf 1 40.0 79.4 700.0 397.2 14 loo.0 6 ooo.3
(for example 140
x (1.567 4)
Year IO, am1 x pwf 20.0 6.4 100.0 32.2
(for example 20 x
0.322 0)
Year 15, Amt x 30.0 5.5 150.0 27.4
pwf (for example
30 x 0.182 7)
Yc;w ’twp .I(!_ (for .‘\I111 rlpmwl x (36.7) (3.8) (188.7) (19.6) (421.7) (43.7) (674.3) (69.9)
)
36.7 x It13
Total 87.5 437.2 (43.7) 10 481.4
III Annual Owning and
:
0perating Gets
a)
Initial capital 49.1 2.52.7 1 129.3 118.5
cost x AF
(for example 367
x 0.133 9)
b) Total replace- 11.7 58.5 (5.9) 1 403.5
ment costs x AF
(for example 87.5
x 0. I33 9)
c) Annual cost of 1041.0 4 023.0 3 213.0 5 625.0
operation and
mainlenance
IV Total Annual&d 1 101.8 4 334.2 4 336.4 7 147.0
Cost
V Production (‘apacity 0.28 1.23 1.383 2.25
VI Annual CostiTonne 3 935.0 3 524.0 3 135.0 3 176.0
of Production
VII Difference in Annual - 800.0 - 389.0 0 - 41.0
(‘ostflonne from
Minimum
VII Present Worth of An- 5 975.0 2 905.0 0 306.0
nual Difference (Dif-
ference x 7.469 4)
Gwclrrsio~r : Alternative III is more cost advantageous.
* NOTE - The initial cost has been assumed, for illustration purposes, as having spent in the first year, in actual practice, this may be spread
over several years. In which case the expenditure in each year will have to be discounted suitably.
g) kcolB IIV sevig the ecnereffid neewteb the -na for ,noitatnemelpmi ti si osla elbissop ot thgilhgih siht
desilaun cost per ennot of noitcudorp for the launna gnivas ot the noisiced gnikam ytirohtua yb
evitanretla the .muminim gniwohs what dluow eb the tcapmi of siht gnirrucer
fro111
launna tsoc- tifeneb ni the mrof~ of rieht tneserp worth.
5.3.2 elihW the serugif ni kcolB IIV yam sevlesmeht
sihT yam ylpmis eb deniatbo yb gniylpitlum the serugif
eb desu ot ekam a nbisiced no the eciohc of sevitanretla
ni kcolB IIV yb fwpu nevig ni xennA B (See kcolB
4
SI 13174 ( t-mP 2 ) : 1994
.)IIIV tI yam XI deton that the rcncreffid ui the efil II ui elbaT 4 lliw cb deniatbo ni the emas yaw
elcyc cost for the suoirav sevitanretla lliw eb lauqe ot as nevig ni 5.2.1 dna 5.2.2 (see skcolB I dnn II
the serugif worked tuo htiw tneserp worth dohtem (see of kb&T 2).
elbaT 2). ehT ecnereffid ni these ,seulav fi ,yua lliw eb b) SA 5 tnecrep noitalfni ni ecnanetniaM‘ dna
eud ot the gnidnuor off errors. gnitarepO Costs’ si gnieb ,demussa siht 5 -rep
5.4 PW Method with Inflation/Deflation tnec noitnlfni lliw evah ot eb deredisnoc ni
5.4.1 ehT tneserP htroW Method dna desilaunnA tsoC noitidda ot the 12 tnecrep tnuocsid rate dna
Method dessucsid ni 5.2 dna 5.3 for noitaluclac of efil ,ylgnidrocca the fwpu has ot eb detaluclac morf
elcyc cost, demussa on noitalfni ni 20 sraey .doirep ,tuB the noisserpxe nevig ni 5.4.1. ehT eulav fwpufo
ti si osla elbissop ot etaluclac the efil elcyc cost yb seinoc tuo ot eb 10.87 dna ylgnidrocca the
gnikat otni noitaredisnoc the .noitalfni roF ,elpmaxe lncnerp worth for ecnanrtniaM‘ dna gnitarepO
elbaT I sedivorp for noiTalarse factor for ecnanetniaM‘ Costs’f or each evitanretla si nwohs ni kcolB .III
dna gnitarepO Costs’ @ 5% per .raey ehT effect of tI yam eb deton that the tneserp worth htiw
noitalfni no CCL snoitaluclac lliw eb ot esaercni the noitalfni (as nevig ni elbaT 4) si hcum rehgih
tneserp worth of erutuf .erutidnepxe ehT noisserpxe for naht ni elbaT 2.
pwf dna fwpu ni hcus cases, yb gnikat otni -aredisnoc lC skcolB VI ot IIV are deniatbo as nevig ni 5.2.4
noit htob the tnuocsid rate ( i ) dna noitalacse rate ( r ) ot 5.2.7.
for a nevig emit doirep t( ,) ym eb deniatbo as :swollof
b (1 - b’)
pwf = ’II
fwpu = )b-l(
sihT elpuraxc setartsulli the CCL noitaulave -tepmocfo
where gni naidnI dna lanoitanretni sdib ro’l ylppus of leseid
cirtcele .sevitoinocol
(, = (1 -t )-110.0
-_-
ehT noitamitse of the laitini &mc detaicossa htiw the
(1 + )ilO.O
tne~ncrucorp of the evitonlocol eht~setatissecen -noc
roF ,elpmaxe for i = ,%Zl ’I = 5% dna I = 20 ,sraey lwp
elbaredis work gnitratb morf gnisingocer the deen for
= 0.275 1 dna iwpu = 10.87. ehT tneserp worth of
the lanoitidda asset, gnissessa of deliated lacinhcet
sR 1 041 noillim tneps yreve raey evitanretlA( 1 of
,xlneuieriuqer noitaraperp of ,snoitacificeps -tlusnoc
elbaT 1) dluow eb 1 041 x 10.87 = ;IR 11 315.67 .noillim
,snoita labolg ,gniredne: ngierof tiderc ,gninnalp
tI si osla elbissop ot wolla for tnereffid rates T0 noitalfni ,noitaulave ,gnilcartnoc ,noitcepsni ot -pus
pilyIllellts
for tncrcffid emit sdoirep as llew as for tnereffid smeti reilp dna lanif .gninoissimmoc/yrevil:td ehT gniwollof
of erutuf detamitse ,serutidnepxe hcus as, rlcf ,lairetam snoitpmussa are gnieb :edam
ruobal rates, ygrcnc rates, etc. nI hcus cases, the
a ) Need for the lanoitidda D
ygolodohtem dluow niamer the enm except that the
sevito~nocol dehsilbatse no
snoitaluclac dluow c~I .dctacilpluoc
)b ydutS of stnemeriuqer dna D + 3 shtnom
5.4.2 ehT c’liI c!cyC tsoC for each of the offers had gniraperp lacinhcet
neeb deraluciac 1991 as the ,esab tub fi noitalfni
wilh SuoitacifiKpS
has OI eb dewolla for, ti dluow csacrcni the tneserp
worth. noitallfnI or noitalled rates arc rehtien launna c) gniraperP labolg srednet dna D + 5 shtnom
gnirusne ngierof egnahcxe
ron lnelsisnoc dna therefore these tsum eb deilppa for
the etairporppa sdnirep as per forecast. tI yam eb deton gnidntifi
that there are rehtn selbairav osla hcihw tonnac eb d) Ma gnirutcafuu dael cinit a du D t 1.5 shtnom
yltcaxe ,detciderp hcus :sa yrcvilrd
a) ecnanetniaM ilnd opl5rittiOll cost raey 10 ,raey e) euD date for gninoissimlI!o,r D + 2 sraey
)b deludehcsnU ,snwodkaerb 11 cimonocE efil _ 18 sraey
c) yciloP .segnahc dna
tsoC setamitse dna other tnaveler data rbf each of the 4
d) Extra SUOCII .srotcl;f evitanretla sdib ot ylppus leseid cirtcele sevitmnocol si
5.4.2.1 llA these aspects lla’I rednu the mlaer of nevig ni elbaT 5.
.gnGsacerof erehT arc suoirav -borpilacitsitats 6.1 Present Worth Method
citsahcotsicitsiliha sledom hcihw nac eb prepared for
elbaT 6 sevig the tfil elcyc cost for each of
gnisU uoissergrr for
l‘ilrecasling. iIll;llySiS, it is possil~le the 4 sevitanretla yb tncscrP htroW )WP( .dohtem sihT
na noitazinagro ot ekam a ylbanosaer good noitciderp
elbat has neeb deniatbo morf elbaT 5 yb gnisu the
dna gnisab snoisiced ylerup no tnerruc .noitamrofni
gniwollof steps.
5.4.3 Example - elbaT 4 sevig the efil elcyc costs for
each of the 4 sevilanretla yb tneserP htroW Method 6.1.1
htiw( .)noitalacse sihT elbat has neeb deniatbo morf a ) ecniS the costs of gniyduts ,stpecnoc ytilibisaef
elbaT 1 yb gnisu the gniwollof :spets ,yduts etc (Rs 0.2 )noillim evah neeb derrucni
ni the tsrif three ,shtnom yeht are demussa ot eb
‘a) ecniS elbaT 1 sedivorp noitalacse +of -niaM‘
derrucco no 01.01.1991 dna therefore the emas
ccnanet dna gnitarepO Costs’ ,ylno kcolB I dna