Problem:
A certain fluidized-bed combustion vessel has an investment cost of $110,000, a life for 10 years, and negligible market (resale) value. Annual costs of materials, maintenance, and electric power for the vessel are expected to total $11,000. A major relining of the combustion vessel will occur during the fifth year at a cost of $30,000.
Required:
Question: If the interest rate is 10% per year, what is the lump-sum equivalent cost of this project at the present time?
Note: Provide support for your rationale.