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You want to make some money, so you want to buy a used car for $2700 to use for work. The vehicle will last 3
You want to make some money, so you want to buy a used car for $2700 to use for work. The vehicle will last 3 years before its worthless. Your insurance says that you must pay $2100 per year to insure the car. You estimate to earn $3600 with car in year 1, $3750 in year 2, and $3800 in year 3. You also have the option of investing the $2700 in a market index returning 12% annually. Should you buy the car and what is the NPV of the opportunity?
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