You are having a hard time deciding whether to get full coverage insurance for your new Suzuki GSX

R$1000$ crotch rocket or to get the minimum coverage for Colorado. The motorcycle shop gives you a sweet

deal, you pay $$15,000$ for the bike. Full coverage insurance will cost you $$400$ per month. In the event of theft

you have a $$500$ deductible, but after that the bank will give you full book value of the bike assuming a useful

life of $10$ years and straight line depreciation. Salvage value after $10$ years is $$3000.$ Bare bones liability $($does

not cover theft and will give you no money for a stolen bike$)$ will cost you $$100$ per month. You are planning a

trip to Daytona in exactly $2$ years, at that time the bike is guaranteed to get stolen and you will not buy another.

To help you make up your mind, assume a discount rate of $6\%/$year compounded monthly $$ you must consider

the time$-$value of money! Don$$t simply add the cash flows.