Contemporary Engineering Economics 6th Edition by Chan Park

Exercise 35

The Geo-Star Manufacturing Company is considering a new investment in a punch-press machine that will cost $100,000 and has an annual maintenance cost of $10,000. There is also an additional overhauling cost of $20,000 for the equipment once every four years. Assuming that this equipment will last infinitely under these conditions, what is the capitalized equivalent cost of this investment at an interest rate of 10%