Determine the capitalized cost for each design

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Reference no: EM13772407

Two incinerators are being considered by a waste management company. Design A has an initial cost of $2,750,000, has annual operating and maintenance costs of $1,000,000, and requires overhauls every 5 years at a cost of $825,000. Design B is more sophisticated, including computer controls; it has an initial cost of $5,750,000, has annual operating and maintenance costs of $800,000, and requires overhauls every 10 years at a cost of $3,250,000.

Using a 9.5 %/year interest rate, determine the capitalized cost for each design.

Reference no: EM13772407

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