Your firm spends $523,000 per year in regular maintenance of its equipment. due to the economic downturn, the firm considers forgoing these maintenance expenses for the next 3years. if it does so, it expects it will need to spend $ 2.1 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 thisdecision?
c. for what costs of capital (coc) is forgoing maintenance a good decision?
a. what is the irr of the decision to forgo maintenance of the equipment?
the irr of the decision is %.
(round to two decimal places.)
Answers: 3
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Your firm spends $523,000 per year in regular maintenance of its equipment. due to the economic down...
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