Question

sorry about that I found the answer

Answer 1

Solution:-

Capitalized Cost is the present worth of an alternative whose project life is very long and is infinite in some cases. Capitalized cost of a perpetual annual series A with interest rate is A/i.

Given here,

Initial Investment = $300 million

Annual expenses = $840,000

Replacement cost = $980,000 every 12 Years

Painting expenses = $91,000 every 8 Years

i = 10% per Year

Capitalized cost = -300,000,000 – 840,000/0.1 – 980,000(A/F,10%,12)/.1 – 91,000(A/F,10%,8)/.1

                              =-300,000,000 – 8,400,000 – 980,000(.0468)/.1 – 91,000(.0874)/.1

                              =-300,000,000 -8,400,000 – 45,864/.1 – 7953.4/.1

                              = -308,400,000 – 458,640 – 79534

                               = -308,938,174

Hence, Estimated Capitalized cost is -308,938,174.