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An industrial machine costing $10,000 will produce net cash savings of $4,000 per year. The machine has a five-year useful life but must be returned
An industrial machine costing $10,000 will produce net cash savings of $4,000 per year. The machine has a five-year useful life but must be returned to the factory for major repairs after three years of operation. These repairs cost $5,000. The companys MARR is 10% per year. Analyse the sensitivity of the IRR to +/- $2000 changes in the repair cost. What is the maximum repair cost that would still make the investment economical?
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