Biotech Partners LLC has been farming a new strain of radioactive-

material-eating bacteria that the electrical utility industry can use to help dispose of its nuclear waste. Two opposing factors affect Biotech’s decision of when to harvest the bacteria: the growth rate of the bacteria and its market price. The bacteria are currently growing at a 22 percent annual rate. Due to competition from other top firms, Biotech analysts estimate that the price for the bacteria will decline according to the schedule below. If the opportunity cost of capital is 10 percent, and free cash flows change in the same way as the change in market price, Biotech should harvest the entire bacteria colony at the end of which year?

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Year Change in Price Due to Competition (%) 1 5% 2 -2 345 -8 -10 -15 6 -25