A manufacturing company is considering switching its product painting either to water-based painting or to dry powder painting. The present cost of product painting is $150,000 per year. Plant management estimates that, with the present painting operation, to meet VOC control requirements it will be necessary to spend $500,000 on incineration equipment which also will require that O&M be increased by $100,000 per year. Switching to water-based paint requires better surface cleaning and longer drying. The study team estimates that new cleaning equipment would cost $250,000 and that O&M would be increased by $50,000 per year. The team has determined that changing to dry-powder painting would require an equipment and facilities investment of $600,000 and that O&M would be decreased by $25,000 per year.

Using n = 10 years and i = 7% in all three cases, which painting alternative would have the lowest total annual cost? PLEASE SOLVE THIS PROBLEM USING THE CAPITAL RECOVERY METHOD.