A man had to have the muffler replaced on his 2-yearold car. The repairman offered two alternatives.

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A man had to have the muffler replaced on his 2-yearold car. The repairman offered two alternatives. For $50 he would install a muffler guaranteed for 2 years. But for $65 he would install a muffler guaranteed "for as long as you own the car." Assuming the present owner expects to keep the car for about 3 more years, which muffler would you advise him to have installed if you thought 20% were a suitable interest rate and the less expensive muffler would only last 2 years?
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Engineering Economic Analysis

ISBN: 9780195168075

9th Edition

Authors: Donald Newnan, Ted Eschanbach, Jerome Lavelle

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