Which statements describe how to calculate total cost of ownership?

• A. Add up costs and multiply by time; Example: A product costs $1000/yr for 5 years = $5000
• B. Multiply by time; Example: A product costs $1000/yr for 5 years = $5000
• C. Add up costs only; No time factor
• D. Subtract maintenance costs from purchase price

Answer: (A)

Total cost of ownership comes from adding up all costs incurred over a defined time period, not just the upfront price. When costs are the same each year, you can estimate TCO by multiplying the annual cost by the number of years. So, $1000 per year for 5 years equals $1000 × 5 = $5000. This shows how the time horizon matters and why the total includes the period you’ll own or use the product, along with any other costs you incur during that time. The other options miss parts of the picture: simply multiplying by time without acknowledging other cost items, or ignoring the time factor entirely, or subtracting maintenance from the purchase price, all fail to capture the full range of costs over the ownership period.