**Car Maintenance Cost Analysis for John's Investment**John, a cost-conscious investor, follows a guideline for automobile maintenance costs, estimating an initial $200 per year. This cost increases by $200 annually throughout the vehicle's lifespan. He is considering buying a four-year-old car with 40,000 miles for $7,000 and plans to own it for eight years. To determine how much to set aside as a lump sum for maintenance, we consider an interest rate of 4% per year.**Calculation:**John must set aside **$9,822** to cover maintenance costs, rounded to the nearest dollar.For detailed financial analysis, view the interest and annuity table for discrete compounding at a 4% annual interest rate.

John is a very cost-conscious investor. His rule of thumb is that it costs $200 per year, starting in the first year of vehicle life to maintain an automobile. This expense increases by $200 each year over the life of the car. John is now considering the purchase of a four-year old car with 40,000 miles on it for $7,000. How much money will John have to set aside now to pay for maintenance (as a lump sum) if he keeps this car for eight years? John's interest rate is 4% per year. Click the icon to view the interest and annuity table for discrete compounding when i = 4% per year. John will have to set aside $9,822 to pay for maintenance. (Round to the nearest dollar.)

John is a very cost-conscious investor. His rule of thumb is that it costs $200 per year, starting in the first year of vehicle life to maintain an automobile. This expense increases by $200 each year over the life of the car. John is now considering the purchase of a four-year old car with 40,000 miles on it for $7,000. How much money will John have to set aside now to pay for maintenance (as a lump sum) if he keeps this car for eight years? John's interest rate is 4% per year. Click the icon to view the interest and annuity table for discrete compounding when i = 4% per year. John will have to set aside $9,822 to pay for maintenance. (Round to the nearest dollar.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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