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Klondike Pharmaceuticals has several herb extractor evaporators that were purchased four years ago at a price of $20,000 (you can ignore inflation). These machines currently

Klondike Pharmaceuticals has several herb extractor evaporators that were purchased four years ago at a price of $20,000 (you can ignore inflation). These machines currently require annual maintenance costs of $2,000. However, the maintenance agreement with the manufacturer expires at the end of two years and Klondike expects annual maintenance to increase to $8,000 per year thereafter. The machines could be sold, as is. for $8,000, but there value will decline to $3,500 at the end of two years. At the end of year 6, the machine's useful life will be over and they will be disposed of as valueless scrap.

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