Question content area top
Part 1
Your firm spends
$ 471 comma 000$471,000
per year in regular maintenance of its equipment. Due to the economic downturn, the firm considers forgoing these maintenance expenses for the next
33
years. If it does so, it expects it will need to spend
$ 2.1$2.1
million in year
44
replacing failed equipment.  
a. What is the IRR of the decision to forgo maintenance of the equipment?
b. Does the IRR rule work for this decision?
c. For what costs of capital (COC) is forgoing maintenance a good decision?
Question content area bottom
Part 1
a. What is the IRR of the decision to forgo maintenance of the equipment?
The IRR of the decision is
enter your response here%.
(Round to two decimal places.)