In current year dollars, a piece of machinery if bought now costs 320,000. It is expected to last a full 6 years and then be replaced. In preparation for replacement, the plan is to have the full replacement amount in an account. The expected annual cost increase of the machine is forecasted to be 4.35%. The deposits planned into the account earning 8.25% are to open now with 50,000 and then make 6 equal end of year deposits with the last one occurring just as the machine is purchased.

a. Applying the cost increase rate, what is the forecasted cost of the machine when it is replaced?

b. What annual deposit amount is required to have the funds required available for machine purchase?