owns an older car. In the past 12 months, he has replace the transmission, boug $160, and installed a CD player for $110. He s for to keep the car for 2 more years because hets money 3 years ago in a 5-year certificate o ested which is earmarked to pay for his dream ma 3-45 A professor of engineering econom two new tires red European sports car. Today the old care, a failed The professor has two alternatives. He can ha the engine overhauled at a cost of $1800 and th next 2 years for maintenance. The car will have per year for the salvage value at that time. Alternatively, a colleague offered to make the professor a $5000 loan to buy another used car. He must pay the loan back in two equal installments of $2500 due at the end of Year 1 and Year 2,and at the end of the second year he must give the colleague the car. What interest rate is the professor paying on the loan from his colleague, if the vehicle will be worth $3000 after 2 years? Is this an ethical interest rate? The "new" used car has an expected an maintenance cost of $3 this alternative, he can sell his current ve a junkyard for $500. Interest is 6%. Using prese worth analysis, which alternative should he se and why? 00. If the professor selects vehicle to ent