Determine the capitalized cost of a permanent roadside histo

Determine the capitalized cost of a permanent roadside historical marker that has a first cost of $92,500 and a maintenance cost of $3,200 once every 8 years. Use an interest rate of 9% per year. The capitalized cost is $ ___.

Solution

We use the standard formula to determine this.

The capitalized cost will be

$92500+3200(1/1.09+1/1.09^2+1/1.09^3+....+1/1.09^8)=$92500+17711.4211671

= $110211.42