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A water treatment plant is evaluating two different maintenance contracts for their equipment. Determine the difference in the present worth values of these contracts at

A water treatment plant is evaluating two different maintenance contracts for their equipment. Determine the difference in the present worth values of these contracts at an interest rate of 10% per year.

Contract 1 covers maintenance costs starting at $12,000 in year 1, and these costs will escalate at a rate of 3% per year for 15 years.

Contract 2 also starts at a cost of $12,000 in year 1, but its costs will escalate at a higher rate of 5% per year for 12 years. Appendix:

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