JTF Limited (JTF), a heating engineering company, has developed a new product called the BioMass Generator, which is a type of water heating system used by farmers. The BioMass Generator is expected to have a life cycle of ten years, at which point JTF hopes to introduce a new water heating system which is more environmentally friendly and fuel efficient.

The accountant employed by JTF has advised the board of directors that life-cycle costing should be used to work out the total production cost of the BioMass Generator and the total estimated profit for the ten-year period.

JTF has spent several years developing the BioMass Generator and getting it ready for market at a cost of 2.5m. The decision to devote so much time, effort and money on the research and development of the BioMass Generator was contentious at the time and some of the board of directors expressed the opinion that, in doing so, attention would be diverted away from other aspects of JTFs business activities.

Evaluate the use of Life-cycle costing at JTF?