Maintenance costs for an industrial system are expected to be as follows:
a) Minimal - years 1 and 2
b) $120,000 – in yr 3
c) Increasing by $20,000 per year, for year 4 through year 7
d) Remaining constant at the year 7 amount for the rest of the 10-year life of the system
Assume replacement at 10 year intervals with similar systems. If MARR = 12%, what is the annual equivalent maintenance cost?