Determine the perpetual equivalent annual maintenance cost

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Reference no: EM131976007

A major company in US in chemical operation has installed an in-shaft monitoring system for oxygen tank and gear readiness for emergencies.

Based on maintenance patterns for previous systems, costs are minimal for the first few years, increase for a time period, and then level off.

Maintenance costs are expected to be $250,000 in year 3, and increasing by 5% per year through year 6 and remain constant thereafter for the expected 10-year life of this system.

If similar systems will replace the current one, determine the perpetual equivalent annual maintenance cost at i=10% per year.

Reference no: EM131976007

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