You're thinking of buying a car to travel around in, rather than using the train. You can buy an old second hand car for $4,000 now (t=0), and sell it after 10 years for $2,000 (t=10). You estimate that the car will cost $3,500 per year in fuel, insurance, registration and maintenance, paid in arrears, so there will be 10 payments from t=1 to t=10 inclusive. Find the equivalent annual cost (EAC) of the car if the required return is 4% pa.

Select one:

a.

$95,664.5493

b.

$32,388.1354

c.

$31,037.007

d.

$3,826.5819

e.

$3,700