Cost Management.

Alicia spends USD4100 per year in regular maintenance of theroof of her house. Since she loses the job recently, she considersforgoing these maintenance expenses for the next 5 year. If shedoes so, it expects it will need to spend USD5000 in year 6 onrepairing the roof. Q1: What is the IRR of the decision to forgo maintenanceof the roof? A) 31% B) 5 % C) 50% D) 41% Q1.2: Does the IRR rule work for thisdecision? A) Yes, we find a unique IRR which enables the NPV equal tozero B) No, we are not sure whether there exist two IRR which canenable the NPV equal to zero C) No, the IRR rule does not

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