A plant manager has received two estimates from contractors to improve traffic flow and repave the parking areas. Proposal A includes new curbs, grading, and paving at an initial cost of $250,000.

The life of the parking lot surface constructed in this manner is expected to be 4 years with an annual cost of $3000 for maintenance and repainting of strips. According to proposal B, the pavement has a higher quality and an expected life of 12 years.

The annual maintenance cost will be negligible for the paved parking area, but the markings will have to be repainted every 2 years at a cost of

$5000, except in the final year 12 of ownership. If the company’s current MARR is 12% per year, how much can it afford to spend on proposal B so the two estimates will break even?