ITPEC FE Morning April 2019 Question 56
Topic: System ComponentAlso asked in November 2021
For servers, the total cost of ownership (TCO) is calculated over a period of 5-years. The purchase price of the servers is $120,500 and the other annual costs are listed as below.
What is the TCO of the servers (in dollars)?
Explanation
140,500 dollars — the purchase price once, plus five years of annual costs.
- •Annual costs: 2,030 + 1,000 + 700 + 270 = 4,000
- •Five years of them: 4,000 × 5 = 20,000
- •TCO: 120,500 + 20,000 = 140,500
Answer (c)
Why not others:
- •(a) 28,100 — the average cost per year, 120,500 ÷ 5 + 4,000 = 24,100 + 4,000, rather than the total over the five years
- •(b) 120,500 — the purchase price alone, leaving out the running costs
- •(d) 622,500 — multiplies the purchase price by five as well, (120,500 + 4,000) × 5, as if the servers were bought every year
Key rule: TCO counts one-time costs once and recurring costs once for every year of the period.
System Component · AI-written, may contain errors
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