# Formula for calculating cost over a certain time period

How can I calculate the cost of a project over a given amount of time.

For example:

• Solution 1: cost 30k setup and 3k/month for as long as we have the service.
• Solution 2: cost 40k setup and 2k/month for as long as we have the service.
• Solution 3: cost 40k setup and 5k/month for as long as we have the service + 20% for monthly service charges.

I calculated these manually (excel) over 3, 6 and 12 year periods.

So for 3 years:

• solution 1: 30K + 3k(36) = 138k
• solution 2: 40k + 2k(36) = 112k
• solution 3: 40K + 2k(36) + 20% = 256k

I just changed out the number of months for each 3 year period and after the first 3 years didn't include the setup cost.

What I'm trying to learn from these calculations is which solution will be the most cost effective (leaving out other factors) over X amount of years. Solution 1 for example is cheaper than solution 3, but after how many years will solution 3 be cheaper than solution 1?

I'm not sure if this is the proper way to do this, if it's acceptable or if there's an easier, better solution.

• Why can't you just use Excel formulas? – Doug B Feb 24 '14 at 21:01
• Is there a specific excel formula I should use? – iliketolearn Feb 25 '14 at 14:14
• Fill in each of the first 5 rows of Column A with incrementally increasing numbers (Cell A1 = 1, Cell A2 = 2, Cell A3 = 3, etc) to give number of years. In Column B put in your first equation into Cell B1 reading "=30000+3000*A1*12". Copy and paste this cell into Cells B2, B3, B4 and B5. In Column C put in your second equation into Cell C1 reading "=40000+2000*A1*12". Copy and paste this cell into Cells C2, C3, C4 and C5. You can then create a graph to show where one crosses the other. – Doug B Feb 25 '14 at 15:59
• Yeah I did that. What I meant by "manual" was making up the formula logic. I wasn't sure if there's was already a function or if this is the proper way to do this. – iliketolearn Feb 25 '14 at 16:58