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You're considering replacing your old car with a new one that will cost $25,000. You will save $3000 per year for 7 years because of better fuel economy and no repair costs. Your current vehicle has zero resale value because it was sideswiped by a dump truck. Your new car will have a resale value of $9000 at the end of 7 years when you plan to sell it. If your effective annual MARR = 5%, does buying the new car have a positive net present worth to you? The nearest answer is: a. - $1500 b. - $1200 c. $0 d. $500 e. $1000

You're considering replacing your old car with a new one that will cost $25,000. You will save $3000 per year for 7 years because of better fuel economy and no repair costs. Your current vehicle has zero resale value because it was sideswiped by a dump truck. Your new car will have a resale value of $9000 at the end of 7 years when you plan to sell it. If your effective annual MARR = 5%, does buying the new car have a positive net present worth to you? The nearest answer is: a. - $1500 b. - $1200 c. $0 d. $500 e. $1000

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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You're considering replacing your old car with a new one that will cost $25,000. You will save $3000 per year for 7 years because of better fuel economy and no repair costs. Your current vehicle has zero resale value because it was sideswiped by a dump truck. Your new car will have a resale value of $9000 at the end of 7 years when you plan to sell it. If your effective annual MARR = 5%, does buying the new car have a positive net present worth to you? The nearest answer is: b. - $1200 c. $0 d. $500 e. $1000 a. - $1500
Transcribed Image Text:You're considering replacing your old car with a new one that will cost $25,000. You will save $3000 per year for 7 years because of better fuel economy and no repair costs. Your current vehicle has zero resale value because it was sideswiped by a dump truck. Your new car will have a resale value of $9000 at the end of 7 years when you plan to sell it. If your effective annual MARR = 5%, does buying the new car have a positive net present worth to you? The nearest answer is: b. - $1200 c. $0 d. $500 e. $1000 a. - $1500
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