A company’s IT department is comparing two technology proposals. Option 1 would retain legacy
equipment while Option 2 would replace the existing equipment with a new one.
Option 1:
Total operation costs = $400,000 per year
Annual storage requirements = $100,000 per year
Option 2:
Initial investment = $1,250,000
Recurring annual operation costs = $150,000 per year
Annual storage requirements = $100,000 per year
The company’s write-off costs for the legacy equipment is $50,000. As a business analyst using a
TCO analysis, which option would you recommend?

A.
Option 1 is feasible if the project lifespan is less than 5 years

B.
Option 1 is feasible if the project lifespan is more than 6 years

C.
Options 1 and 2 are feasible if the project lifespan is 5 years

D.
Option 2 is feasible if the project lifespan is less than 5 years