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Joe Cool has just purchased a four-year-old used car for $3000. A friend, studying Industrial Engineering, has suggested that he determine in advance how long he should keep the car so as to ensure the greatest overall economy. Joe has decided that, because of style changes, he would not want to keep the car longer than four years and he has estimated the annual expenses and market values for the first 4 years as follows: 1. Year 1 $950 Year 2 $1,050 Year 3 $1,100 Year 4 $1,550 Annual Expenses Market Value at $2,250 $1,800 $1,450 $1,160 end of year If the cost of capital is 12% per year, at the end of which year should he dispose of the car? Joe Cool has just purchased a four-year-old used car for $3000. A friend, studying Industrial Engineering, has suggested that he determine in advance how long he should keep the car so as to ensure the greatest overall economy. Joe has decided that, because of style changes, he would not want to keep the car longer than four years and he has estimated the annual expenses and market values for the first 4 years as follows: 1. Year 1 $950 Year 2 $1,050 Year 3 $1,100 Year 4 $1,550 Annual Expenses Market Value at $2,250 $1,800 $1,450 $1,160 end of year If the cost of capital is 12% per year, at the end of which year should he dispose of the car