Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. you currently don't have a car, but rent a car tha

You currently don't have a car, but rent a car that's parked just outside your...

50.1K

Verified Solution

Question

Finance

You currently don't have a car, but rent a car that's parked just outside your house whenever you need one. Your annual expenditure on rental cars is $2,500.

You are now considering purchasing a car that would give you the same level of convenience as your current life style. The car costs $26,000 and can be sold for $5,000 after 10 years. You'd purchase the car with money from your savings account which always earns an interest rate of 6%.

Assume that all cash flows occur at the end of each year (maybe because you drive much more around Thanksgiving and Christmas). What is the present value of the benefits of owning that car, i.e., saving on rental expenses and selling the car?

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

I'm doing a lab report determination of ascorbic acid in vitamin C tablet. The equation used are:...

Chemistry
Q

If a patient was diagnosed with Creutzfeldt-Jakob disease before death and the autopsy reveals that the...

Medical Sciences
Q

Coronado Company follows the practice of pricing its inventory at the lower-of-cost-or-market, on an individual-item basis. Item No. Quantity Cost...

Accounting
Q

Which of these processes can move a solute against its concentration gradient diffusion osmosis active...

Biology
Q

Complete the first two months of an amortization schedule for the fixed rate mortgage Mortgage...

Basic Math
Q

Store makes Valentine s Day gift boxes that cost 10 75 and sell for 16...

Basic Math
Q

You would like to construct a 95 confidence interval to estimate the p random sample...

Statistics
Q

A water tank shown to the right is shaped like an inverted cone with height...

Calculus
Q

The comparative balance sheets for 2021 and 2020 are given below for Surmise Company. Net...

Accounting
Q

Sharp Company manufactures a product for which the following standards have been set: Standard Quantity...

Accounting
Q

QUESTION ELEVEN (11): ICAG NOVEMBER 2019 The draft statements of financial position of Atia Ltd...

Accounting
Q

Exavior Inc.'s cash flow from assets during the current year is $180 million, which is...

Finance