Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 29

A Pennsylvania coal mining operation has installed an in-shaft monitoring system for oxygen tank and gear readiness for emergencies. Based on maintenance patterns for previous systems, there are no maintenance costs for the first 2 years, they increase for a time period, and then they level off. Maintenance costs are expected to be $150,000 in year 3, $175,000 in year 4, and amounts increasing by $25,000 per year through year 6 and remain constant thereafter for the expected 10-year life of the system. If similar systems with similar costs will replace the current one, determine the perpetual equivalent annual maintenance cost at i = 10% per year.