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Assume that you are trying to decide whether you should keep your presently owned car or purchase a new hybrid car. A new car will
Assume that you are trying to decide whether you should keep your presently owned car or purchase a new hybrid car. A new car will cost $30,000 and have annual operation and maintenance costs of $1200 per year with a $10000 salvage value in 5 years (this is the estimated economic service life). Your owned car has a resale value now of $6000; one year from now it will be $4000, two years from now $3000, and 3 years from now $2200. Its operating cost is expected to be $1900 this year, with costs increasing by $150 per year. You cannot use your existent car longer than 3 more years. Assuming used cars like the one presently owned will always be available, should you sell the presently owned car now, 1 year from now, 2 years from now, or 3 years from now? Make the annual worth calculations at i=10% per year and show your work
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