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Question(s) / Instruction(s):

A firm desires to overhaul its equipment to provide service for the next nine years.  The firm’s real MARR = 10% and inflation is estimated to be 5% per year.  If the following costs are real (constant worth) dollars, which should the firm do and what is its present worth cost of doing it?

                a. Completely overhaul for $10,000 now

                b. Major overhaul for $7000 now and then a minor overhaul for $5000 at the end of five years from today

                c. A minor overhaul today for $5000, another minor overhaul at the end of 3 years and then another at the end of five years from today.

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