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“A city government is considering two types of town-dump sanitary systems. Design A requires an initial outlay of $530,000 with annual operating and maintenance costs of $56,000 for the next 13 years. Design B calls for an investment of $290,000 with annual operating and maintenance costs of $81,000 per year for the next 13 years. Fee collections from the residents for both designs would be $94,000 per year. The interest rate is 5%, and no salvage value is associated with either system.
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