Subject information:Service Life = 12 yearsFuel = $9.

The correct answer is B. $216,000 . The question is asking for the annual operating cost for Car C across the full 12-year service life , not the one-year annual fuel cost alone. In life-cycle cost analysis, SAVE defines life-cycle cost as the sum of initial cost, recurrent annual cost, single expenditures, and disposal cost or salvage value over a specified period. It also defines recurrent annual cost as the operation and maintenance cost that occurs throughout each year of service life.

For Car C , annual fuel use is calculated from the annual driving distance and fuel efficiency:

40,000 km per year ÷ 20 km per liter = 2,000 liters per year

Fuel costs $9.00 per liter , so the annual fuel cost is:

2,000 liters × $9 = $18,000 per year

The service life is 12 years , so the annual cost over the service life is:

$18,000 × 12 years = $216,000

Option A. $18,000 is only the annual cost for one year. Option C. $198,000 has no valid basis from the stated data. Option D. $36,000 would match neither Car C’s annual fuel use nor its service-life total. Tire replacement cost is excluded because the question asks for annual cost, not repair and replacement cost.

References/topics: Evaluation Phase; Life-Cycle Cost; Recurrent Annual Cost; Fuel Operating Cost; Service Life Costing.