Your firm spends $ $409$ comma $000$ per year in regular maintenance of its equipment. Due to the economic$$ downturn, the firm considers forgoing these maintenance expenses for the next $3$ years. If it does$$ so$,$ it expects it will need to spend $ $1\mathrm{.}9$ 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 costs of capital$($COC$)$ is forgoing maintenance a good$$ decision?

Question content area bottom

Part $1$

a$.$ What is the IRR of the decision to forgo maintenance of the$$ equipment?

The IRR of the decision is

$$

enter your response here$\%.($Round to two decimal$$ places.$)$

Part $2$

b$.$ Does the IRR rule work for this$$ decision?

$$

Yes

No

$.($Select from the$$ drop$-$down menu.$)$

Part $3$

c$.$ For what costs of capital$($COC$)$ is forgoing maintenance a good$$ decision? $($Select from the$$ drop$-$down menu.$)$

For costs of capital that are

$$

greater than

less than

the

$$

NPV

maintenance costs

IRR

replacement costs

$.$

The IRR of the decision is$($Round to two decimal places.$)$Does the IRR rule work for this decision?$($Select from the drop$-$down menu.$)$For costs of capital that arethethe.