A new American graduate is contemplating buying a Japanese, German, or American car. No matter the type of car, he plans to buy a new one at the end of 8years. Japanese car will cost 40,000 and have a fuel usage of 23miles per gallon for the first 2 years, and will decrease 3% per year thereafter. Repair cost will start at 700 per year, and increase by 3% per year. At the end of year 8, the car can be sold for 6000. Insurance cost will be 700 for the first year,increasing by 3% per year thereafter. German car will cost 45,000 and have fuel usage of 21 miles per gallon for the first 5 years and decrease by 1% thereafter to 8 years. Repair cost will start at 1000 in year 1 and increase by 4% per year. It will have a salvage value of 7000 at the end of year 8. Insurance cost will be sold 850 the first year, increasing by 3% per year thereafter. The American car will cost 35,000 and have usage of 20miles per gallon for the first 3years and will decrease by 3% per year thereafter. Repair cost will be 750 in year 1, increasing by 4% per year thereafter. Being an American, the graduate will price the pride of owning an american car at 0.4 for every 20 miles driven, increasing by 2% per year. Insurance cost will be 800 per year increasing by 20 miles per year. The car can be sold for 5500 at the end of year 8 If the graduate anticipates driving 160000 miles by the end of year 8 and the average interest rate is expected to remain at 8% per year, which of car is economically affordable based on present worth analysis? Assume fuel cost will be cost will be 4 per gallon in year 1 and increase by an average of 3% per year. Show all your workings.
A new American graduate is contemplating buying a Japanese, German, or American car. No matter the type of car, he plans to buy a new one at the end of 8years.
Japanese car will cost 40,000 and have a fuel usage of 23miles per gallon for the first 2 years, and will decrease 3% per year thereafter. Repair cost will start at 700 per year, and increase by 3% per year. At the end of year 8, the car can be sold for 6000. Insurance cost will be 700 for the first year,increasing by 3% per year thereafter.
German car will cost 45,000 and have fuel usage of 21 miles per gallon for the first 5 years and decrease by 1% thereafter to 8 years. Repair cost will start at 1000 in year 1 and increase by 4% per year. It will have a salvage value of 7000 at the end of year 8. Insurance cost will be sold 850 the first year, increasing by 3% per year thereafter.
The American car will cost 35,000 and have usage of 20miles per gallon for the first 3years and will decrease by 3% per year thereafter. Repair cost will be 750 in year 1, increasing by 4% per year thereafter. Being an American, the graduate will price the pride of owning an american car at 0.4 for every 20 miles driven, increasing by 2% per year. Insurance cost will be 800 per year increasing by 20 miles per year. The car can be sold for 5500 at the end of year 8
If the graduate anticipates driving 160000 miles by the end of year 8 and the average interest rate is expected to remain at 8% per year, which of car is economically affordable based on present worth analysis? Assume fuel cost will be cost will be 4 per gallon in year 1 and increase by an average of 3% per year. Show all your workings.
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