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Your firm spends $420,000 per year in regular maintenance of its equipment. Due to the economic downturn, the firm considers forgoing these maintenance expenses for
Your firm spends $420,000 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 $1.9 million in year 4 replacing failed equipment. . What is the IRR of the decision to forgo maintenance of the equipment? o. Does the IRR rule work for this decision? . For what costs of capital (COC) is forgoing maintenance a good decision
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