The manufacture of folic acid is a competitive business. A new plant costs $100,000 and lasts for three years. The cash flow from the plant is as follows: year 1: +$43,300; year 2: +$43,300; and year 3: +$58,300. (Assume no taxes.) If the salvage value of the plant at the end of year 1 is $80,000, should you scrap the plant at the end of year 1?

Multiple Choice

• Yes

• No

• More information is needed.

• I don't know.