a) A family is planning to buy a vacation cabin for $30,000. The family intends to keep the cabin for 6 years and expects the annual unkeep and taxes to amount to $900 per year. Without any major repairs, the cabin should have a resale price of $26,000. What is the equivalent annual cost of owning the cabin if the familys acceptable interest rate is 6%?

b) Maintenance records of a certain type of machine indicate that the first-year maintenance cost of $80 increases by $30 per year over the 10-year replacement period of the machine. Answer the following if the maintenance cost is considered to occur at the end of the year and the firms interest rate is 12%: a) What equal annual payments could the firm make to a service organization to carry out the maintenance for 20 machines? b) How much additional could be paid for a new type of machine with the same service life that required no maintenance during its life?