Your firm spends $ 436 000$436000per year in regular maintenance of its equipment. Due to the economicdownturn, the firm considers forgoing these maintenance expenses for the next 33years. If it doesso, it expects it will need to spend $ 1.9$1.9million in year 44replacing failed equipment.

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

b. Does the IRR rule work for thisdecision?

c. For what costs of capital(COC) is forgoing maintenance a gooddecision?