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5. Your client is considering two alternatives for a bioremediation system for treating groundwater, a water circulation system and an air injection system. The water circulation system has a construction cost of $1.3 million, annual O&M costs of $75,000, and refurbishment/upgrade costs of $220,00 every 15 years. The air circulation system has a construction cost of 1.7 million, annual operating costs of $57,000, and refurbishment/upgrade costs of $300,000 every 20 years. Assume the system will operate indefinitely for a number of years. Use an interest rate of 5%, do not consider inflation. a. What is the capitalized cost of the water circulation system? b. What is the capitalized cost of the air injection system?
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