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You are operating a water pump that will last 2 more years. It costs $12,000 per year to operate. You can replace it now with
You are operating a water pump that will last 2 more years. It costs $12,000 per year to operate. You can replace it now with a new water pump, which costs $25,000 but is much more efficient ( $8,000 per year in operating costs) and will last for 5 yrs. The opportunity cost of capital is 6%. Should you replace now or wait a year
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