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A small company heats its building and spends $8,800 per

Question : A small company heats its building and spends $8,800 per : 148580

A small company heats its building and spends $8,800 per year onnatural gas for this purpose. Cost increases of natural gas areexpected to be 9% per year starting one year from now (i.e., thefirst cash flow is $9,592 at EOY one). Their maintenance on the gasfurnace is $345 per year, and this expense is expected to increaseby 12% per year starting one year from now (i.e., the first cashflow for this expense is $386.40 at EOY one). If the planninghorizon is 13 years, what is the total annual equivalent expensefor operating and maintaining the furnace? The interest rate is 18%per year.

The total annual equivalent expense for operating andmaintaining the furnance is $_____ thousands. (Round to 3 decimalplaces)

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