Categories of Cash Flows First cost: expenses to build or to buy and install Operations and maintenance (O&M: annual expense, such as electricity, labor, and minor repairs Salvage value: receipt at project termination for sale or transfer of the equipment Revenues: annual receipts due to sale of products or services Overhaul: major capital expenditure that occurs during the asset's life I. Problem (10 points) A waste management company is considering the purchase of an incinerator. One of the designs considered has an initial cost of $2.5 M, has annual operating and maintenance costs of $800,000 and requires overhauls every 5 years at a cost of $1,250,000. The estimated life of the incinerator is 15 years and salvage value of $100,000. Please identify the costs involved in this problem and classified each according to the categories discussed in class. Show the cashflow diagram associated with this