E221 - John needs a commute car. He has three options shown in the following table, using annual worth analysis, what is the Annual Worth (AW) Cost of Each Option. MARR = 10% compounded monthly.
2003 Subaru 2005 Civic Rent
Purchasing Price $ 6,000.00 $ 6,500.00 $ -
Annual Operation Cost $ 500.00 $ 200.00 $2,200
Rental Resale price $ 2,500.00 $ 2,000.00
Years to keep 3 4 Forever
2003 Subaru | 2005 Civic | Rent | |
EAW | $2,180.88 | $1,843.55 | 2200 |
2003 Subaru | 2005 Civic | |
0 | -6000 | -6500 |
1 | -500 | -200 |
2 | -500 | -200 |
3 | 2000 | -200 |
4 | 1800 | |
Effective rate=(1+APR/m)^m-1 | 10.47% | |
NPV | -5378.83 | -5784.69 |
Workings
E221 - John needs a commute car. He has three options shown in the following table, using annual worth analysis, what is...