Your firm spends $600,000 per year (end of the year payment) in regular maintenance of its equipment

Finance Dec 26, 2020

Your firm spends $600,000 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 $2.7 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?

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