The capitalized cost of an asset is the sum of the original cost of the asset and the present value of maintaining the asset. Suppose a company is considering the purchase of two different machines. Machine 1 costs $10,000 and t years from now will cost M₁(t) = 1,000(1 + 0.06t) dollars per year to maintain. Machine 2 costs only $8,000, but its maintenance cost at time t is M₂(t) = 1,100 dollars per year.

If the cost of money is 9% per year compounded continuously, what is the capitalized cost of each machine? Which machine should the company purchase?