Adam got a signing bonus for his new engineering job and bought a 2002 Porsche 911 Turbo with low miles for $45,000. Adam spent $5000 on aftermarket parts, for $50,000 total initial cost. Adams modifications decreased the market value to $40,000. Adam plans to drive it to work every day and the added mileage depreciates the value $250 per year ($40k market value in year one, $39,750 in year two, etc.). Maintenance costs will start out as $500 in year one and increase $250 per year. Adam plans to drive this car until it becomes more economical to buy a similar replacement. Based on a 10-year replacement analysis and MARR=8%, at the end of which year should Adam replace this car? For this problem, you may assume inflation = 0% and Actual$=Real$.

Adam got a signing bonus for his new engineering job and bought a 2002 Porsche 911 Turbo with low miles for $45,000. Adam spent $5000 on aftermarket parts, for $50,000 total initial cost. Adams modifications decreased the market value to $40,000. Adam plans to drive it to work every day and the added mileage depreciates the value $250 per year ($40k market value in year one, $39,750 in year two, etc.). Maintenance costs will start out as $500 in year one and increase $250 per year. Adam plans to drive this car until it becomes more economical to buy a similar replacement. Based on a 10-year replacement analysis and MARR=8%, at the end of which year should Adam replace this car? For this problem, you may assume inflation = 0% and Actual$=Real$.

A.1

B.2

C.3

D.4

E.5

F.6

G.7

H.8

I.9

J.10