Homework Answers
The model cost for Ford is $29,000. The MARR per year is 18%. Therefore, MARR = $29,000*18% = $5220 per year. For three years it would be, $15660. The operating cost of the vehicle per year is $200. For three years it would be, 200*3 = $600. The trade in value of the vehicle after three years would be, 50% of the cost of the vehicle, which is, $29,000/2 = $14,500. The trade in value of the vehicle is lesser than the cost of the vehicle after three years.
The model cost for Toyota is, $32,000. The MARR per year is 18% which would be, $32,000*18% = $5760. For three years it would be, $17280. The trade in value of the vehicle would be, 32,000*60% = $19200. The trade in value of the vehicle is greater than the cost of the vehicle after three years.
Therefore, the person should buy Toyota as the trade in value is greater than the actual cost of the vehicle after three years. It means the person will not be at a loss after selling the vehicle, more so he will be at a profit.
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