EXAMPLE
For this example, we will start with three variables to compare two hypothetical Installations for treatment of VOCs: Installation A (Active carbon filters) and Installation B (CLIMATIC – UV and carbon filters). The variables chosen are initial cost (I), OPEX (O+M), and the remaining value after 1^{st} year of depreciation (R).
Installation A has a very affordable upfront cost.
CLIMATIC (Installation B) has a much bigger upfront cost as Installation A.
Based on this information alone, Installation A would be the clear choice. However, the TCO can tell us a lot more about which option is best.
I + (M + O) – R = TCO
 Installation A

 I = €50,000
 M+O = €458,000
 R = €45,000
 TCO = €463,000

 CLIMATIC (Installation B)
 I = €600,000
 M+O = €380,000
 R = €540,000
 TCO = €440,000

In this example, the TCO of CLIMATIC is less than installation A, hence the choice of investment, even though its initial cost was more than 10 times as much. However, the gap of this investment is only €23,000, which here is only a slight difference.
Furthermore, the above was only an example using year 1 as the comparison and include an accounting principle of 10% depreciation annually over a 10 year period (linear).
Now adding a financial principle, to the above simple comparison, we would look at a period of 5 years (equal to the standard term of O&M, offered by CLIMATIC), using an annual interest rate of 6% and again applying the above mentioned depreciation. We will now calculate the M+O cost annual payments, assuming this investment is a loan, forward to a Future value (FV) but used as a todayvalue, for investment comparison (a kind of PV), hence making the TCO calculation more reliable. This will give the following calculations:
I + (M + O) – R = TCO
 Installation A
 I = €50,000
 M+O = €2,581,789
 R = €25,000
 TCO = €2,606,789

 CLIMATIC (Installation B)
 I = €600,000
 M+O = €2,142,095
 R = €300,000
 TCO = €2,442,095

€2,606,789– €2,442,095= €164,693
CLIMATIC TCO is €164,693 less than Installation A, which is a much wider and reliable gap. The price gap become wider with adding a longer period (Using 10 years would give a €973,102 in favour of CLIMATIC) as well as for every variable that you add, giving you a clear choice for cost value. For this calculation, it is assumed that D and P are similar for both installations, hence not used.