Total cost of ownership (TCO) refers to the lifetime cost of buying an asset. In simple terms, we can say that it is the total monetary cost attributed to an asset spanning from the purchase planning to its disposal. TCO analysis helps to disclose all direct, indirect as well as any hidden costs associated with a purchase. Therefore, its helpful to examine whether a cost-effective product is as economical as one think.

Your company wants to buy a 20 ft commercial truck. Quotes obtained so far are as follows :

Tata Motors : INR 8,50,000

Mahindra : INR 9,50,000

Ashoke Leyland : 10,50,000

1. What are the various components you would consider in order to decide which particular model of car you want to buy ?
2. Based on the format below (modify as required and insert value of your choice), prepare a TCO chart and arrive at a decision to buy a particular model

ParticularsTataMahindraAshokeAcquisition cost Operational cost 1 2 Maintenance cost 1 2 Residual value/Resale value Total cost