How often should gerry get a new car

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Reference no: EM131356349

Gerry likes driving small cars and buys nearly identical ones whenever the old one needs replacing. Typically, he trades in his old car for a new one costing about Si 5 000. A new car warranty covers all repair costs above standard maintenance (standard maintenance costs are constant over the life of the car) for the first two years. After that, his records show an average repair expense (over standard maintenance) of S2500 in the third year (at the end of the year), increasing by 50% per year thereafter. If a 30% decliningbalance depreciation rate is used to estimate salvage values, and interest is 8%, how often should Gerry get a new car?

Reference no: EM131356349

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