0405 pro02 two incinerators are being considered by a waste management
-04.05-PRO02: "Two incinerators are being considered by a waste management company. Design A has an initial cost of $2,500,000, has annual operating and maintenance costs of $800,000, and requires overhauls every 5 years at a cost of $1,250,000. Design B is more sophisticated,including computer controls; it has an initial cost of$5,750,000, has annual operating and maintenance costs of $600,000, and requires overhauls every 10 years at a cost of $3,000,000. Using a 5%/year interest rate,determine the capitalized cost for each design and recommend which should be chosen?
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