The purpose of this paper is to introduce the basics of life cycle cost analysis for use in an undergraduate, senior-level capstone, gas turbine engine design course. This paper will support the heightened interest within the military acquisition community that now requires life cycle cost analysis to be included in the proposals submitted by defense contractors. The capstone design course includes both the gas turbine engine cycle selection and engine component design that supports a particular aircraft application. While the students have been taught how to estimate the fuel costs, engine development costs, and the time-varying production costs of engines, they have not yet been provided instruction on how to factor all three types of costs into an engineering economics, time-value-of-money, present value analysis. This paper will fill that gap and serve as a resource for the students who must now consider life cycle cost as an element in their design decision matrix along with engine performance, technical risk, and development time. The typical case compares an engine where the upfront development and production costs associated with a more advanced level of technology are high early on in the life cycle but over time has a lower fuel cost compared to an engine with a lower development and production cost but with a higher fuel cost. This paper illustrates how the aerodynamics, thermodynamics, and engineering economics can be brought together to inform and defend a decision about which of the two (or more) alternatives is best. The engineering economic analysis is spreadsheet based and uses inflation adjusted, total annual costs to calculate the present value for use in a decision matrix.

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