Question: Maintenance costs for pollution control equipment on a pulverized coal cyclone furnace are expected to be $180,000 now and another $70,000 three years from now.

Maintenance costs for pollution control equipment on a pulverized coal cyclone furnace are expected to be $180,000 now and another $70,000 three years from now. The CFO of Monongahela Power wants to know the equivalent annual cost of the equipment in years 1 through 5. If the company uses a real interest rate of 9% per year and the inflation rate averages 3% per year, what is the equivalent annual cost of the equipment?

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