Question
**Show work and formula in Excel** A used defender can be kept for two more years and then sold for an estimated $3,000 or it
**Show work and formula in Excel**
A used defender can be kept for two more years and then sold for an estimated $3,000 or it can be sold now for $10,000. The average annual maintenance cost over the past 7 years has been $500 per year. However, if the car is kept for two more years, that cost is expected to be $1,800 the first year and $2,000 the second year. As an alternative, a new challenger can be purchased for $22,000 and be used for four(4) years, after which it can be sold for $8,000. The new car will be under warranty for the first 4 years and no extra maintenance cost will be incurred during those years.
If the MARR is 15 percent per year what is the better option?
Keep the defender. The EUAC of the defender = 497.67. EUAC of the new challenger is - 9307.96
Keep the defender. EUAC of the defender = 5653.49. The EUAC of the new challenger = 9307.96
Keep the defender. EUAC of the defender = 2862.79. EUAC of the challenger = 4903.71.
Purchase the new challenger. EUAC of the used defender = 6648.84. EUAC for the new challenger is 6103.71
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Derivative Products And Pricing The Das Swaps And Financial Derivatives Library
Authors: Satyajit Das
1st Edition
0470821647, 9780470821640
