A value study team is comparing two HVAC systems: System A costs $200,000 upfront with $15,000 annual operating costs; System B costs $150,000 upfront with $22,000 annual operating costs. Over a 20-year life at a 5% discount rate, which statement best describes the correct LCC approach?
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A
Discount each system's annual costs to present value and add to initial cost before comparing
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B
Multiply annual costs by 20 and add to initial cost, since discounting only applies to revenues
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C
Compare initial costs only, because operating costs are the owner's responsibility
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D
Select System B because lower first cost always wins under value methodology