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1) A machine is to be purchased at a cost of $30,000. The following table shows the expected annual operating and maintenance cost and the
1) A machine is to be purchased at a cost of $30,000. The following table shows the expected annual operating and maintenance cost and the salvage value for each year of service: If the interest rate is 12%, what is the economic service life for the machine?
| Year of Service | O & M Cost | Market Value |
| 1 | $5,000 | $25,800 |
| 2 | $6,500 | $16,000 |
| 3 | $10,000 | $10,000 |
| 4 | $12,500 | $5,000 |
| 5 | $14,800 | 0 |
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