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Two incinerators are being considered by a waste management company. Design A has an initial cost of $2,200,000, has annual operating and maintenance costs of
Two incinerators are being considered by a waste management company. Design A has an initial cost of $2,200,000, has annual operating and maintenance costs of $900,000, and requires overhauls every 5 years at a cost of $1,225,000. Design B is more sophisticated, including computer controls; it has an initial cost of $5,650,000, has annual operating and maintenance costs of $450,000, and requires overhauls every 10 years at a cost of $2,950,000. Part a Using a 6.5%/ year interest rate, determine the capitalized cost for each design. Design A: \$
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