Two incinerators are being considered by a waste management company. Design A has an initial cost of $2,650,000, has annual operating and maintenance costs of $750,000, and requires overhauls every 5 years at a cost of $1,375,000. Design B is more sophisticated, including computer controls; it has an initial cost of $5,650,000, has annual operating and maintenance costs of $450,000, and requires overhauls every 10 years at a cost of $3,250,000.
Using a 6.5 %/year interest rate, determine the capitalized cost for each design.
Design A: $
Design B: $