Building a new maintenance center

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Riddle Airways (RA) is considering building a new maintenance center that will allow reducing its maintenance expenses by 30%. Current maintenance expenses are $500,000 a year, and they are expected to grow by 10% per year into the foreseeable future. If RA uses a 15-year study period and MARR of 18%, how much could RA afford to spend now on the maintenance center?

Reference no: EM133068316

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