Question
helen purchased a small used car 3 years ago for $3,100. She estimates the resale value of the car to be $2,400 today and expects
helen purchased a small used car 3 years ago for $3,100. She estimates the resale value of the car to be $2,400 today and expects the value to further depreciate at a rate of 8% per year over the coming years. She has been tracking her operating and maintenance costs for the last several years and she is confident that her O&M costs for the current year will be $340 and will increase by $500 per year for the next few years. If Eva uses a MARR of 10%... (a) What would the minimum EAC of a replacement car need to be for her to justify replacing her current car? (your answer will be less than ...X) (b) If the minimum EAC of a replacement car turns out to be $766, what should she do? (c) What if the minimum EAC of a replacement car is $762; what should she do?
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