4.0 Life cycle costing method is a method comparing the initial construction cost, the annual running costs and maintenance costs of a system to a common value (the present value) among different systems. The idea is to consider and select the lowest total costs (present value) of the system. Based on the following information, compute the total life cycle costing for these two building services automation systems and suggest which type of systems would you recommend. (25%) Building Services automation system Type A Type B Expected life 7 years Initial installation cost: 7 years $40,000,000 $660,000 per $43,000,000 Annual running cost: $520,000 per year year Annual maintenance cost: $500,000 per $420,000 per year year $1,800,000 Major Replacement cost at the end of Yr. 4 Major Replacement cost at the $700,000 end of Yr. 5 Appropriate discount rate 6% 6% To be dismantled at Yr. 7 No scrap value No scrap value