Clopack company manufactures one product that goes through one processing department called mixing. all raw materials are introduced at the start of work in the mixing department. the company uses the weighted-average method of process costing. its work in process t-account for the mixing department for june follows (all forthcoming questions pertain to june):

You are the manager of a large crude-oil refinery. as part of the refining process, a certain heat exchanger (operated at high temperatures and with abrasive material flowing through it) must be replaced every year. the replacement and downtime cost in the first year is $165 comma 000. this cost is expected to increase due to inflation at a rate of 7% per year for six years (i.e. until the eoy 7), at which time this particular heat exchanger will no longer be needed. if the company's cost of capital is 15% per year, how much could you afford to spend for a higher quality heat exchanger so that these annual replacement and downtime costs could be eliminated?