An auto dealership is running a promotional deal whereby they will replace your tires free of charge for the life of the vehicle when you purchase your car from them. You expect a set of tires to last the 30,000 miles minimum the dealership specifies. If you expect the cost of an installed set of new tires to remain at $400 (F) and you will trade your car after you have driven 150,000 miles, what is the lump sum value of this promotion at your personal interest rate of 10%? [Hint: New tires every two years (EOY 2, 4, 6, 8, 10).]

a.

$2,000

b.

$1,710

c.

$1,066

d.

$1,170