You are the manager of a hotel. Your hotel needs a new 12 passenger van to transport your guests to and from the airport. You have selected two different replacement vehicles. The cost information for the two vehicle options is listed below. You plan on keeping the vehicle for 5 years. The costs listed below are based on information found on Edmonds.com at 1:00 pm on August 22, 2017. However due to a lack of complete information on both vehicles, some of the costs are estimated.

, Purchase new van with a gasoline engine

Purchase Price: $26,500. You pay $5,300 down (including trading-in value of the old vehicle) and finance the remaining $21,200 at a nominal annual rate of 4.99% for four years, resulting in a monthly payment of $448.12. This is paid at the end of the month.

Maintenance Cost: The maintenance schedule for the vehicle is as shown below. Assume all payments are made at the end of the year.

Year 1: $625

Year 2: $1,200

Year 3: $2,000

Year 4: $650

Year 5: $1,200

Repair Cost: the vehicle comes with a three-year warranty (0 cost for the first three years). For the remaining two years it will cost $450 per year (starting at the end of the third year) with an annual increase of 16.00%. This payment is made at the end of each year.

Insurance Cost: $625 per year with an annual increase of 2.75% per year. This payment is made at the beginning of the year.

Fuel Cost: $200 per month with a monthly increase of 0.25%. This payment is made at the end of the month.

Taxes:

Sale tax: $1,500 due when you purchase the vehicle.

License plate fee: $240 per year with an annual inflation rate of -8.00%. This payment is made at the beginning of the year.

At the end of 5 years the salvage value is expected to be $13,250.

The monthly return on investment expected by the hotel is 0.5000%. This is your nominal monthly interest rate.

The equation to convert monthly interest to annual interest is:

i_annual = (1 + i_monthly)¹² - 1

The equation for the effective monthly interest rate for multiple payments is:

i_effective = ((1 + i_nominal) / (1 + Inflation)) 1

The present value equation for a one-time payment/receipt is:

PV = FV * (1 + i)^-n

The present value equation for multiple payments/receipts is:

PV = A * (((1 + i_effective)ⁿ - 1) / (i_effective * (1 + i_effective)ⁿ))

Calculate the effective interest rates for maintenance, repair, insurance, fuel, and license plate. Please give your answers in decimals and not percentages. Please round each answer to four significant digits.

i_annual = (1 + i0.5000)¹² 1 = 128.7463

i_{effective, loan} =

i_{effective, repair} =

i_{effective, insurance} =

i_{effective, fuel} =

i_{effective, license plate} =