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A Tata costs $10,000, its salvage value declines by straight-line depreciation of $1,250 per year, and its maintenance costs are $100 in the first year,
A Tata costs $10,000, its salvage value declines by straight-line depreciation of $1,250 per year, and its maintenance costs are $100 in the first year, and they go up by 50% per year. Raj and Rashid both like to drive Tata cars. Raj trades her car in for a new model when it reaches its economic life, whereas Rashid keeps his until it reaches the end of its physical life. Raj and Rashid both have MARRs of 5%. On average, how much more does Rashid pay for his Tata per year than Raj? Show your calculations.
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