You should decide whether it is profitable to replace an old car by a new one. The original car can be abandoned if it has high maintenance costs. The current annual repair costs for the existing car are € 15,000. The following data is available for the new vehicle:

Based on the cost comparison method, decide whether the asset should be replaced. Fixed costs for taxes and insurance are the same for the old and the new vehicle: € 1,500. Both vehicles require operating costs of € 0.20 per kilometre when driven 30,000 kilometres per year.

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Initial outlay Economic life Variable costs: Maintenance per year Interest rate 48,000 8 years 1,000 5%