Nippon Steel’s expenses for heating and cooling a large
manufacturing facility are expected to increase according to an
arithmetic gradient beginning in year 2. If the cost is $550,000
this year (year 0) and will be $550,000 again in year 1, but then
it is estimated to increase by $40,000 each year through year 12,
what is the equivalent annual worth in years 1 to 12 of these
energy costs at an interest rate of 13% per year?