A college student has been looking for a new tire for his car and has located the following alternatives:
Tire Warranty (months) Price per Tire
12....................................$39.95
24....................................59.95
36....................................69.95
48....................................90.00
The student feels that the warranty period is a good estimate of the tire life and that a 10% interest ran is appropriate. Use an annual cash flow analysis to determine which tire he should buy.