Madison is in the market for a new car. One of the cars she's interested in a used Lexus ES250 which will cost $32,235 to purchase. Madison estimates that annual operating costs (e.g., gas, maintenance, insurance premiums, registration) will come to about $5,018 per year. Given the mileage on the car and the amount that she plans to drive each year (e.g., to/from work, some trips to visit family, etc.) Madison thinks the car will last about 9 year. At that point, she assumes the car will be worthless. Madison decides to use a discount rate of 10% in her analysis. 

What is the equivalent annual cost (EAC) of this Lexus ES250, given Madison's assumptions?

Answer rating: 100% (QA)

To calculate the equivalent annual cost EAC of the Lexus ES250 we can use the concept of the present ... View the full answer