A small industrial machine costs $222,000 and is expected to earn annual net cash inflows of $74,000, $83,000, $91,000 and $81,000, before it wears out sufficiently to be unreliable and must be sold for an estimated $54,900. The discount factors based on the discount rates are as follows: Year 2 Year 3 Year 4 0.8900 0.8396 0.7972 0.7118 Discount factors Year 1 0.9434 0.8929 6% 12% 0.7921 0.6355