A potential buyer of a sportscar is interested in the costs of a vehicle per...
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A potential buyer of a sportscar is interested in the costs of a vehicle per mile travelled at net present value. The buyer is planning to sell the car after three years of operation at residual value. The car costs 29000.00 to purchase and the buyer incurs costs for insurance, fuel and mantenance of 1600.00 per year. The car is expected to depreciate in value by 3500.00 per year (straight line depreciation). The buyer is planning to travel 18000 miles per year.
What is the total cost of ownership per mile travelled at net present value, assuming that all payments arise annually and are subject to an annual discount rate of 5%. Note that the miles travelled are not subject to discounting.
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