D.2. An electric power dam is proposed with the following estimated data: cost of new dam = $12,000K cost of new generator = $ 5,000K The generator must be replaced every 15 years, and the cost escalates 4 percent per year. annual O & M costs at EOY 1 through EOY 5 = $500K/yr O & M cost at EOY 6 = $600K/increasing $10K/yr/yr thereafter salvage value of dam at end of life = $1,000K life = permanent interest rate i= 10% Find the capitalized cost of the electric power dam.

Essentials Of Investments
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Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
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D.2. An electric power dam is proposed with the following estimated data:
cost of new dam =
$12,000K
i
cost of new generator = $ 5,000K
The generator must be replaced every 15 years, and the cost escalates 4 percent per year.
annual O & M costs at EOY 1
through EOY 5 = $500K/yr
O & M cost at EOY 6 = $600K/increasing $10K/yr/yr thereafter
salvage value of dam at end of life = $1,000K
life = permanent
interest rate i = 10%
Find the capitalized cost of the electric power dam.
Transcribed Image Text:D.2. An electric power dam is proposed with the following estimated data: cost of new dam = $12,000K i cost of new generator = $ 5,000K The generator must be replaced every 15 years, and the cost escalates 4 percent per year. annual O & M costs at EOY 1 through EOY 5 = $500K/yr O & M cost at EOY 6 = $600K/increasing $10K/yr/yr thereafter salvage value of dam at end of life = $1,000K life = permanent interest rate i = 10% Find the capitalized cost of the electric power dam.
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