life-cycle costing

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The approach to determining the total costs of a fixed asset that takes into account all the costs likely to be incurred both in acquiring it and in operating it over its effective life. For example, the initial cost to an airline of an aircraft is only part of the costs relevant to the decision to purchase it. The operating costs over its effective life are also relevant and would therefore be part of the decision-making data.

Subjects: Financial Institutions and Services — Accounting.

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