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A small high-speed commercial centrifuge has the following net cash flows and abandonment values over its useful life. The firm's MARR is 12% per year.

A small high-speed commercial centrifuge has the following net cash flows and abandonment values over its useful life. The firm's MARR is

12%

per year. Determine the optimal time for the centrifuge to be abandoned if its current MV is

$7,000

and it won't be used for more than five years.

End of Year

1

2

3

4

5

Annual revenues less expenses

$2,200

$2,200

$2,200

$2,200

$2,200

Abandonment value of

machinea

$6,000

5,500

$4,000

$2,300

0

aEstimated

MV.

Click the icon to view the interest and annuity table for discrete compounding when

MARR=12%

per year.

The centrifuge should be retained for

enter your response here

year(s) before abandonment. (Round to the nearest whole number. Type 0 if the centrifuge should be abandoned immediately.)

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