An interim bus service is to have a life of 13 years, with capital investments required:

(1) initially - $1.2 million, and (2) at the end of year 8 - $1.2 million. The

capital costs are for new and replacement buses, which have a service life of

8 years. All other expenses amount to $450,000 annually. What is the annualized

cost of the service, over its useful life? Interest is 5%.