=+LG 3 P15–7 Marginal costs Alessandro is a successful soccer player. He is considering buying a new Porsche. There are two options available: the new Porsche Panamera and the Porsche Boxter. Whichever model he chooses he plans to drive it for a period of around 4 years and then sell it. Assume that the trade-in value of both cars is the same at the end of the 4-year period.

The two models have many differences, and Alessandro needs to make a financial comparison. The price at the car dealer in Torino of the Boxter is €48,000 and of the Panamera is €60,000. Alessandro believes that the difference of €12,000 to be the marginal cost difference between the two cars. However, his friend, who is an economist, tells him to look into more data before making a decision. Assume that the prevailing discount rate for both cars is 3% annually. Other information on this purchase is shown in the following table.