Petrobras, the Brazilian energy company, has identified two alternatives to provide potable water to offshore platforms—purchase and operate the equipment, or contract long term with Manal and Associates, an international oilfield service corporation. For the estimates shown, use capitalized cost analysis at i = 6% per year to determine

(a) The better economic choice for Petrobras,

(b) The maximum annual M&O cost that will cause Manal and Associates to succeed in winning the contract.