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Consider a building monitoring system that costs $350,000 to install and an additional cost of $80,000 after 5 years. The annual maintenance contract cost is
Consider a building monitoring system that costs $350,000 to install and an additional cost of $80,000 after 5 years. The annual maintenance contract cost is $8000 for the first 3 years and $5000 thereafter. In addition, there is expected to be a recurring major upgrade cost of $20,000 every 8 years. Assume interest rate is 5% per year. (a) Draw the cash flow diagram for the first 16 years. (b) What is the capitalized cost of the system
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