A machine costs to maintain $155 per year but maintenance costs are escalating at $35 per year. If the machine has a life of 8 years:

1. Give the Equivalent Annual Cost (EAC) for this case if interest is 6%. How much would you have to invest in an interest bearing account at 6% to pay for the maintenance costs over the 8 years?

2.If the machine needs an overhaul at the start of the period that costs $1,000, what will the EAC be then?