Should the firm spend 5m to rebuild and extend the dragline, Business Economics

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Should the firm spend 5m to rebuild and extend the dragline

By spending $4M to rebuild and extend its dragline, the firm in Problem 4.18 can reduce the annual drop in net revenue to $200K. Should the firm do this? Should the firm spend $5M to rebuild and extend the dragline even further? This would reduce the annual drop in net revenues to $150K.

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