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Blossom 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

Blossom 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 Blossom's decision of when to harvest the bacteria. The bacteria are currently growing at a 19 percent annual rate, but due to known competition from other top firms, Blossom analysts estimate that the price for the bacteria will decline according to the schedule below. If the opportunity cost of capital is 9.5 percent, then when should Blossom harvest the entire bacteria colony at one time?

Year 1 2 3 4 5 6

Change in Price Due to Competition (%)

Year 1 is at 5%

Year 2 is at -2%

Year 3 is at -8%

Year 4 is at -10%

Year 5 is at -15%

Year 6 is at -25%

Blossom should harvest the entire bacteria colony at the end of year which year?

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