Homework Answers
ANSWER:
capitalized cost of initial investment + capitalized cost of $10,000 adjustment for first 30 years will be
cc1 = -$1,000,000 + 10,000(p/a,6%,30) = -$1,000,000 + 10,000 * 13.765 = -$1,000,000 + $137,650 = -$862,350
capitalized of $20,000 maintenance forever = maintenance cost / interest rate = -$20,000 / 6% = -$333,333.33
total capitalized cost of the project = cc1 + cc2 = -$862,350 + (-$333,333.33) = -$862,350 - $333,333.33 = -$1,195,683.33
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