Tom is considering purchasing a $24,000 car. After five years, he will be able to sell the
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Tom is considering purchasing a $24,000 car. After five years, he will be able to sell the vehicle for$7,500. Petrol costs will be £1,900 per year, insurance $700 per year, and parking $700 per year. Maintenance costs will be £900, rising by £400 per year thereafter.Assume all costs are payable at the end of the year. The alternative is for Tom to take taxis everywhere. This will cost an estimated $6000 per year. Tom will rent a vehicle each year at a total cost (to year end) of $600 for the family vacation, if he has no car. If Tom values money at 6%/year (compounded annually), should he buy the car?
Related Book For
Cornerstones of Cost Management
ISBN: 978-1285751788
3rd edition
Authors: Don R. Hansen, Maryanne M. Mowen
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