Question
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.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started