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You have a 1999 Nissan that is expected to run for another three years, but you are considering buying a new Hyundai before the Nissan wears out. You will donate the Nissan to Goodwill when you buy the new car. The annual maintenance cost is $1700 per year for the Nissan and $200 for the Hyundai. The price of your favorite Hyundai model is $18000, and it is expected to run 15 years. Your opportunity cost of capital is 8 percent. Ignore taxes.

a) find out the EAC for both Nissan and Hyundai.

b) When should you buy the new Hyundai?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M939044

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