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You are about to buy a new house. The roof has only 5 years of life remaining. A new roof would last 20 years, but
You are about to buy a new house. The roof has only 5 years of life remaining. A new roof would last 20 years, but would cost $20,000. The house is expected to last forever and assume that you will live forever. Assuming that costs in the future remain constant, and that the interest rate is 5%, what value would you assign to the existing roof if you keep it rather than replace it immediately?
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