A firm expects to install smog control equipment on the exhaust of a gasoline engine. The local smog control district has agreed to pay to the firm a lump sum of money to provide for the first cost of the equipment and maintenance during its 10-year useful life. At the end of 10 years the equipment, which initially cost $10,000, is valueless. The firm and the smog control district have agreed that the following are reasonable estimates of the end-of-year maintenance costs:
Year 1 $75 Year 6 $200
2 $100 7 $225
3 $125 8 $250
4 $150 9 $275
5 $175 10 $300
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