You have a 1993 Nissan that is expected to run for another three years, but you are

Question:

You have a 1993 Nissan that is expected to run for another three years, but you are considering buying a new Hyundai before the Nissan wears out. You will donate the Nissan to Goodwill when you buy the new car. The annual maintenance cost is $1,500 per year for the Nissan and $200 for the Hyundai. The price of your favorite Hyundai model is $18,000, and it is expected to run for 15 years. Your opportunity cost of capital is 3 percent. Ignore taxes. When should you buy the new Hyundai?

Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of... Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...