Find the repair cost in dollars in the third year

Reference no: EM131006186

You are deciding whether to buy a new car or two-year-old car (of the same make). Your decision will be based on which car will have cost you less when you resell it at the end of three years. Your cost consists of two parts: the loss in value of the car and repairs. A new car costs $27000 and loses 13% of its value each year. Repairs are $100 the first year and increase by 16% each subsequent year.

i. For a new car, find the depreciation (loss of value) in dollars in the third year.

First year depreciation: $3510.00
Second year depreciation: $3053.70

Give a formula for d_n, the depreciation in the n^th year. This is not a series.

ii. For a new car, find the repair cost in dollars in the third year.

First year repair cost: $100.00
Second year repair cost: $116.00

Give a formula for r_n, the repair cost in the nth year. This is not a series.

Reference no: EM131006186

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