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To decrease costs of operating a lock in a large river, a new system of operation is proposed. It will cost $450,000 to design and

To decrease costs of operating a lock in a large river, a new system of operation is proposed. It will cost $450,000 to design and build. It is estimated that it will have to be reworked every 10 years at a cost of $50,000. In addition, there will be an expenditure of $40,000 at the end of the fifth year for a new type of gear that will not be available until then. The annual operating costs are expected to be $30,000 for the first 15 years and $25,000 a year thereafter. Compute the capitalized cost of perpetual service at i=10%.

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