You plan to purchase a car for $28,000. Its market value will decrease by 20 percent...

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You plan to purchase a car for $28,000. Its market value will decrease by 20 percent per year. You have determined that the IRS-allowed mileage reimbursement rate for business travel is about right for fuel and maintenance at $0.505 per mile in the first year. You anticipate that it will go up at a rate of 10 percent each year, with the price of oil rising, influencing gasoline, oils, greases, tires, and so on. You normally drive 15,000 miles per year. What is the optimum replacement interval for the car? Your MARR is 9 percent. Flood damage in the Brush Creek area averages $7,000 annually. Civil engineers with floodplain expertise have designed a series of small dams to restrain the flow. They will cost $25,000 and will involve annual maintenance charges of $500. What is the anticipated benefit/cost ratio if the interest rate is 6 percent, the service life is 10 years, and the salvage value is $5,000? You plan to purchase a car for $28,000. Its market value will decrease by 20 percent per year. You have determined that the IRS-allowed mileage reimbursement rate for business travel is about right for fuel and maintenance at $0.505 per mile in the first year. You anticipate that it will go up at a rate of 10 percent each year, with the price of oil rising, influencing gasoline, oils, greases, tires, and so on. You normally drive 15,000 miles per year. What is the optimum replacement interval for the car? Your MARR is 9 percent. Flood damage in the Brush Creek area averages $7,000 annually. Civil engineers with floodplain expertise have designed a series of small dams to restrain the flow. They will cost $25,000 and will involve annual maintenance charges of $500. What is the anticipated benefit/cost ratio if the interest rate is 6 percent, the service life is 10 years, and the salvage value is $5,000?

Answer rating: 100% (QA)

SOLUTION Optimum Replacement Interval for the Car To determine the optimum replacement interval for the car we need to calculate the annual costs and ... View the full answer