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HVAC Life-Cycle Cost and Payback Calculator

Compare two equipment options on everything they will cost over their life — not just the price — with net savings, savings-to-investment ratio and payback.

Method reviewed October 26, 2026. Version 1.0.0. How it works

Your inputs

Above inflation. Federal projects use the rate NIST publishes each year; for a household, the return you would otherwise earn.

Result

Life-cycle cost, option A
$25,116
Life-cycle cost, option B
$24,035
Net savings of B over A
$1,081

Option B costs $1,081 less over 15 years in today’s dollars.

Savings-to-investment ratio
1.43
Simple payback
8.33years
Discounted payback
9.74years
Show the working
  1. Life-cycle cost = first cost + present value of yearly costs over the study period
    A: $25,116; B: $24,035
  2. Uniform present value factor at 3 % for 15 years (NIST HB 135)
    11.9379
  3. Net savings = LCC(A) − LCC(B); SIR = PV of savings ÷ extra first cost
    $1,081; SIR 1.433

Life-cycle cost

Life-cycle cost is the first cost plus the present value of every yearly cost over a study period. Future costs are discounted at a real discount rate, so a dollar of energy saved in year 10 counts for less than a dollar today. This is the method of NIST Handbook 135, the life-cycle costing manual for federal energy projects.

From the two life-cycle costs the calculator reports:

  • Net savings of the alternative.
  • Savings-to-investment ratio: present value of savings ÷ extra first cost; above 1 means it pays for itself.
  • Simple payback, and discounted payback, which counts the time value of money.

Choosing the inputs

Use the same study period for both options, usually the expected life of the equipment. Energy costs can come from the Annual Operating Cost Calculator. Federal projects use the discount rate NIST publishes each year; for a household, use the return you could otherwise earn on the money.

Worked example

These are the example values the calculator opens with, and the result the engine calculates for them.

Inputs

Option A (base): first cost
9,000 $
Option A: energy cost per year
1,200 $
Option A: maintenance per year
150 $
Option B (alternative): first cost
11,500 $
Option B: energy cost per year
900 $
Option B: maintenance per year
150 $
Study period
15
Real discount rate
3 %
Real energy price change per year
0 %

Result

Life-cycle cost, option A
$25,116
Life-cycle cost, option B
$24,035
Net savings of B over A
$1,081
Savings-to-investment ratio
1.43
Simple payback
8.33 years
Discounted payback
9.74 years

Option B costs $1,081 less over 15 years in today’s dollars.

Assumptions

  • End-of-year costs, constant dollars, discounted at the real rate you enter (NIST Handbook 135 method). Energy costs may escalate in real terms; maintenance does not.

Limitations

  • Residual values, replacements within the study period and financing are not included; use the Repair or Replace Calculator for a replacement-timing question.

Frequently asked questions

Is simple payback enough?

It is easy to understand but ignores the time value of money and savings after the payback year. Net savings or the savings-to-investment ratio give a fuller picture.

What does a savings-to-investment ratio of 1.5 mean?

Over the study period, the alternative saves $1.50 in today’s dollars for every extra dollar invested up front.

How is this different from Repair or Replace?

Repair or Replace compares fixing your current system with replacing it, including when the repaired system will fail. This calculator compares any two new options side by side.

Sources

  1. Handbook 135: Life Cycle Costing Manual for the Federal Energy Management Program (2025 ed.) — NIST. Life-cycle cost, net savings, savings-to-investment ratio, simple and discounted payback; uniform present value factors.

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