Annualised cost is a financial technique used to distribute lifecycle costs evenly over the asset’s useful life . It provides a normalized basis for comparison of alternatives.
Exact Extract from IAM – Asset Management: An Anatomy (v4), Section 4.5.1 – Whole-Life Costing:
“Annualised lifecycle cost = Total lifecycle cost / Estimated service life. This method allows direct comparison between asset options with different expected lives.”
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