You are a manager for Baskin Robbins, which just purchased a new piece of equipment for $9,700. You are trying to determine the estimated useful life and residual value for the new equipment for straight-line depreciation calculations. After doing research you gather the following information:

• The old piece of equipment that this new purchase is replacing lasted for 7.5 years. Baskin Robbins sold the old equipment for $1,200.
• A competitor in the same industry uses a useful life of 4 years and residual value of $3,500 for its equipment.
• Baskin Robbins predicts that equipment technology will change rapidly in the next 5 years. Baskin Robbins intends to start saving so they can upgrade equipment after the technology upgrades occur.
• An internet search shows that used equipment currently sells for approximately $1,000 (8 years old) to $6,000 (3 years old).

Make an estimate for the useful life and residual value of this equipment