Capitalized cost of assset is the sum of original cost

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The capitalized cost of an assset is the sum of the original cost of the asset and the present value of maintaining the asset. Suppose a company is considering the purchase of two different machines. Machine 1 costs $10000 and t years from now will cost M1(t)=3000(1+0.04t) dollars to maintain. Machine 2 costs only $4000, but its maintenance cost at time t is M2(t)=3300 dollars. If the cost of money is 6% per year compounded continuously, what is the capitalized cost of each machine?

Reference no: EM131088038

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