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42 Your firm spends $493,000 per year in regular maintenance of its equipment. Due to the economic downtum, the firm considers forgoing these maintenance experses
42
Your firm spends $493,000 per year in regular maintenance of its equipment. Due to the economic downtum, the firm considers forgoing these maintenance experses for the next 3 years. If it does so, it expects it will need to spend $2.1 million in year 4 replacing failed equipment. a. What is the IRR of the decision to forgo maintenance of the equipment? b. Does the IRR rule work for this decision? c. For what conta of capital (COC) is forgoing maintenance a good decision? 2. Who is the IRR of the decision to forgo maintenance of the equipment? The IRR of the decision is Round to two decimal places) Step by Step Solution
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