Your firm spends $472,000 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 $1.8 million in year 4 replacing failed equipment. For what costs of capital (COC) is forgoing maintenance a good decision?

Group of answer choices

When cost of capital > 11%

When cost of capital > 12%

When cost of capital > 11%

When cost of capital < 12%