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Your firm spends $800,000 per year (end of the year payment) in regular maintenance of its equipment. Due to the COVID-19 economic downturn, the firm
Your firm spends $800,000 per year (end of the year payment) in regular maintenance of its equipment. Due to the COVID-19 economic downturn, the firm considers forgoing these maintenance expenses for the next three years. If it does so, it expects it will need to spend $3 million in year 4 (end of the year payment) replacing failed equipment. Does the IRR rule work for this decision? For what MARR is forgoing maintenance a good decision? a IRR rule does not work, Positive NPW only if MARR >11,58% b. IRR rule works, Positive NPW only if MARR> 11.58% OC. IRR rule works, Positive NPW only if MARR
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