Question: A $20,000 machine will be purchased by a company whose interest rate is 10%. It will cost $5000 to install, but its removal costs are

A $20,000 machine will be purchased by a company whose interest rate is 10%. It will cost $5000 to install, but its removal costs are insignificant. What is its economic life if its salvage values and O&M costs are as follows:

Year1: S = $16K, O&M = $5K

Year2: S = $13K, O&M = $8K

Year3: S = $11K, O&M = $11K

Year4:S = $10K, O&M = $14K

Year5: S = $9.5K, O&M = $17K

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