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The capitalized cost C of an asset is given by C = C 0 + where C 0 is the original investment, t is the
The capitalized cost C of an asset is given by C = C0 +
where C0 is the original investment, t is the time in years, r is the annual interest rate compounded continuously, and c(t) is the annual cost of maintenance.
Assume the original investment is $650,000, r is 6%, and the maintenance cost is $25000(1+.08t).
Find the capitalized cost of the asset for
a. t = 5 years,
b. t = 10 years,
c. t = forever
c(t)e ttdtStep by Step Solution
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