Reference no: EM132915324

Problem 1: Ben is starting college next month. He currently has a 1997 Chevy Corsica, purchased a year ago for $2,000. The Corsica's annual insurance totals $2,000 and fuel expense (to and from college) is estimated at $200 per month. He estimates that the Corsica will have repair costs of $500 per year for the next four years. Ben expects the Corsica to be worthless by the time he graduates college. Ben is considering selling the Corsica for $1,000 and purchasing a 2010 Honda Accord for $7,000. By doing this, he will be comfortably work as a SkipTheDishes driver, generating $1,200 in monthly revenues (approximately 70 hours of work per month). Because of the higher mileage, Ben expects to pay $800 a month for fuel and $300 per quarter for repairs and maintenance. The Accord's insurance will be $210 per month. Ben believes he will be able to sell the Accord for $2,000 fours years from now. Advise Ben on buying the Accord, discussing all relevant factors.