A small high-speed commercial centrifuge has the following net cash flows and abandonment values over its useful life. The firm's MARR is 10% per year. Determine the optimal time for the centrifuge to be abandoned if its current MV is $8,000 and it won't be used for more than five years Annual revenues less expenses $1,900 Abandonment value of machine" $6.100 End of Year 3 $1,900 $1,900 5,200 $3,800 "Estimated MV. Click the icon to view the interest and annuity table for discrete compe 4 $1,900 $2,000 $1,900 0
A small high-speed commercial centrifuge has the following net cash flows and abandonment values over its useful life. The firm's MARR is 10% per year. Determine the optimal time for the centrifuge to be abandoned if its current MV is $8,000 and it won't be used for more than five years Annual revenues less expenses $1,900 Abandonment value of machine" $6.100 End of Year 3 $1,900 $1,900 5,200 $3,800 "Estimated MV. Click the icon to view the interest and annuity table for discrete compe 4 $1,900 $2,000 $1,900 0
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Transcribed Image Text:A small high-speed commercial centrifuge has the following net cash flows and abandonment values over its useful
life. The firm's MARR is 10% per year. Determine the optimal time for the centrifuge to be abandoned if its current MV
is $8,000 and it won't be used for more than five years
End of Year
3
2
$1,900 $1,900 $1,900
$6.100 5,200 $3,800
***
Annual revenues less expenses
Abandonment value of machine
"Estimated MV.
Click the icon to view the interest and annuity table for discrete compounding when MARR = 10% per year.
5
$1,900
0
$1,900
$2,000
The centrifuge should be retained for year(s) before abandonment. (Round to the nearest whole number. Type 0 if
the centrifuge should be abandoned immediately.)
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