TCO analysis covers ownership life or life cycle, but how long is life?
Cost of ownership analysis attempts to uncover all of the obvious costs and all of the "hidden" costs of ownership across the full ownership life or life cycle of the acquisition. Usually, however, there is room for judgement and different opinions regarding the appropriate lifespan to analyze. In specifying ownership life or life cycle, owners may very well take notice of several other "lives" that are in view:
Depreciable life: The number of years over which an asset will be depreciated. In each year of this life, a depreciation expense is calculated (as prescribed by local tax laws and accounting standards), which lowers reported income while creating a tax savings.
Economic life:
The number of years in which the acquisition returns more value to the owner than it costs to own, operate, and maintain.
When these costs exceed returns, the acquisition is beyond its economic life.
Service life: The number of years the acquisition will actually be in service.