1. An oil transfer pump that costs $1,000,000 is
expected to have a 3 year life, at which time it will have to be replaced with
the same pump costing the same amount.
Maintenance costs will increase each year. The cost per year is shown in the following
table (including the purchase cost at time 0).
Assume the maintenance costs occur at the end of each year and that each
year is 1 year long. Use a 13%/annum
interest rate. What is the uniform
equivalent annual cost (UEAC) for the pump if we assume the UEAC occurs at the
end of each year: