Your old car costs you $600 per month in gas and repairs. If you replace it, you could sell the old car immediately for $4000. To buy a new car that would last five years, you need to pay out $20 000 immediately. Gas and repairs would cost you only $240 per month on the new car. Interest is 9% compounded monthly. Should you buy a new car? Why?
For the investment choices, compute the net present value. Determine investment should be accepted or rejected according to the net present value criterion.