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Another drawback is that most installations had very few circuits & you may find that with all the modern gizmos you own, you could have some trouble tripping circuit brekers.
Since you have the money available, I'd recommend doing the replacement just so you'd have the peace of mind.
Also, I've heard that some insurance companies will not insure buildings with K&T wiring. I've had to jerk it out & replace it in a few homes in the area I live in.
Would you recommend nonmetallic sheathed typ NM-B cables "sheathed electrical cable", or Type AC, Armor Clad Cable, known as "BX" ?
I've never been a fan of Armored Cable, Metal Clad is more to my liking. I wouldn't even be able to guess how much money using AC or MC cable would add to the cost. If cost is not a prine consideration, MC would be my choice.
To the best of my knowledge, "sheathed electrical cable" has an excellant safety record when properly installed. Therefore, for most of us with limited resources, I'd have no second thoughts recommending sheathed electrical cable, provided that it meets local codes.