To meet the increasing demand for the construction of new buildings, a company bought a new bulldozer. Continuous operation is expected to cost $120 a year. Maintenance is only required for the first seven years of use and costs $0 at the end of the first year and then increases $90 each year for the rest of the maintenance period (until the end of year 7). With the proper maintenance, the machinery can sustain 10 years of usage before a replacement is needed. So there are two kinds of costs; (1) operational cost which is a constant annual cost per year for 10 years, and (2) maintenance cost which is a gradient series of payments over 7 years. Assuming the interest to be 1%. Question 1 What is the present worth of the annual operational costs? To meet the increasing demand for the construction of new buildings, a company bought a new bulldozer. Continuous operation is expected to cost $120 a year. Maintenance is only required for the first seven years of use and costs $0 at the end of the first year and then increases $90 each year for the rest of the maintenance period (until the end of year 7). With the proper maintenance, the machinery can sustain 10 years of usage before a replacement is needed. So there are two kinds of costs; (1) operational cost which is a constant annual cost per year for 10 years, and (2) maintenance cost which is a gradient series of payments over 7 years. Assuming the interest to be 1%. Question 1 What is the present worth of the annual operational costs?