Jerry Smith’s residential air conditioning (AC) system has not been able to keep his house cool enough in 90◦F weather. He called his local AC maintenance person, who discovered a leak in the evaporator. The cost to recharge the AC unit is $40 for gas and $45 for labor, but the leak will continue and perhaps grow worse. The AC person cautioned that this service would have to be repeated each year unless the evaporator is replaced. A new evaporator would run about $800–$850. Jerry reasons that fixing the leak in the evaporator on an annual basis is the way to go. “After all, it will take 10 years of leak repairs to equal the evaporator’s replacement cost.” Comment on Jerry’s logic. What would you do?

Jerry Smith’s residential air conditioning (AC) system has not been able to keep his house cool enough in 90◦F weather. He called his local AC maintenance person, who discovered a leak in the evaporator. The cost to recharge the AC unit is $40 for gas and $45 for labor, but the leak will continue and perhaps grow worse. The AC person cautioned that this service would have to be repeated each year unless the evaporator is replaced. A new evaporator would run about $800–$850. Jerry reasons that fixing the leak in the evaporator on an annual basis is the way to go. “After all, it will take 10 years of leak repairs to equal the evaporator’s replacement cost.” Comment on Jerry’s logic. What would you do?

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter2: Income Tax Concepts

Section: Chapter Questions

Problem 79DC

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