Engineering Economy - Engineering

Q1:

If a is the base amount expenditure, b is the increase in the operation cost each year over a period of n years, the total cost of maintenance is :

A a + (n + 1) b

B a + (n - 1) b

C a x (n - 1) b

D a - (n - 1) b

ANS:B - a + (n - 1) b

It starts from the base period i.e. at t=0 so that the number of the year is (n-1).

And total cost is equal to = base cost (a) + no.of year (n-1) x maintenance per year (b).