A special-purpose machine is to be purchased at a cost of $30,000. The following table shows the expected annual operating and maintenance cost and the salvage value for each year of service: Year of Service         O & M Cost          Market Value          1                          $5,000                     $25,800          2                          $6,500                     $16,000          3                         $10,000                    $10,000          4                         $12,500                      $5,000          5                        $14,800                             $0If the interest rate is 12%, what is the economic service life for this machine?

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A special-purpose machine is to be purchased at a cost of $30,000. The following table shows the expected annual operating and maintenance cost and the salvage value for each year of service:
 Year of Service         O & M Cost          Market Value
          1                          $5,000                     $25,800
          2                          $6,500                     $16,000
          3                         $10,000                    $10,000
          4                         $12,500                      $5,000
          5                        $14,800                             $0
If the interest rate is 12%, what is the economic service life for this machine?

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