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An interim bus service is to have a life of 13 years, with capital investments required:
(1) initially - $1.2 million, and (2) at the end of year 8 - $1.2 million. The
capital costs are for new and replacement buses, which have a service life of
8 years. All other expenses amount to $450,000 annually. What is the annualized
cost of the service, over its useful life? Interest is 5%.
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