Marsha Jones has bought a used Mercedes horse transporter for her

Connecticut estate. It cost $$35,000.$ The object is to save on horse transporter

rentals.

Marsha had been renting a transporter every other week for $$200$ per day plus

$$1\mathrm{.}00$ per mile. Most of the trips are $80$ or $100$ miles in total. Marsha usually

gives the driver, Joe Laminitis, a $$40$ tip. With the new transporter she will

only have to pay for diesel fuel and maintenance, at about $$0\mathrm{.}45$ per mile.

Insurance costs for Marsha's transporter are $$1,200$ per year.

The transporter will probably be worth $$15,000($in real terms$)$ after eight

years, when Marsha's horse Spike, will be ready to retire. Assume a nominal

discount rate of $9\%$ and a $3\%$ forecasted inflation rate. Marsha's transporter is

a personal outlay, not a business or financial investment, so taxes can be

ignored.

Calculate the NPV of the investment.