Sara has graduated from HS and her parents have given her a car fund of $21,000 to
Question:
Sara has graduated from HS and her parents have given her a car fund of $21,000 to help purchase and maintain a 3 year old car in college. Because of maintenance costs, her parents tell her that she may trade in her car for another 3 year old car (at a cost of $12000), one or more times during the next 3 summers if she determines that it will minimizer her overall costs. They also tell her that in 4 years they will buy her a new car as a college graduation present so she should definitely plan on trading in the car then. Yearly operational and maintenance cost are provided below.
Operation and Maintenance Costs of ownership year | Trade in Values at End of Ownership Year | |||||||
---|---|---|---|---|---|---|---|---|
Car Purchase Price | 1 | 2 | 3 | 4 | 1 | 2 | 3 | 4 |
$12,000 | $200 | $300 | $4500 | $6500 | $8500 | $6500 | $4500 | $300 |
Formulate the problem as a minimum flow network problem and then solve it using excel.
South-Western Federal Taxation 2018 Comprehensive
ISBN: 9781337386005
41st Edition
Authors: David M. Maloney, William H. Hoffman, Jr., William A. Raabe, James C. Young