A building contractor is evaluating two alternatives for improving the exterior appearance of a small commercial building that he is renovating. The building can be completely painted at a cost of $2, 800. The paint is expected to remain attractive for 4 years, at which time repainting is necessary. Every time the building is repainted, the cost will increase by 20% over the previous time.
As an alternative, the building can be sandblasted now and every 10 years at a cost 40% greater than the previous time. The remaining life of the building is expected to be 38 years. The MARR is 10% per year. What is the maximum amount that can be spent now on the sandblasting alternative for the two alternatives to just break even? Use present worth analysis to solve this problem.