During the treatment of associated natural gas it was decided to install a knockout drum

in the feedline of the plant. This vessel can be purchased and installed for $40,000 and

will last for 10 years. An old vessel is avail-able and can be used but needs to be repaired.

However, the repairing has to be done every 3 years. If it is assumed that the two vessels (the new and the old ones) have equal capitalized costs, how much does the

maintenance department have to spend repairing the old knockout drum? Assume

interest is 10%.