You are planning to buy a car for $25,000 today and its running costs will be $5,000 per annum paid in arrears. After six years the car will be worthless and have no salvage value. Your cost of funds is 5% p.a.

The equivalent annual cost (EAC) of this car is closest to:

(a) $4,339

(b) $5,000

(c) $7,412

(d) $9,925

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