What is the economic life of the vehicle

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Reference no: EM132033580

A used automobile can be purchased by a student to provide transportation to and from university for $25,000 as-is (i.e. without warranty). First year maintenance cost is expected to be $750 and the maintenance costs will increase by $150 per year thereafter. Operation costs for the automobile will be $5,000 for every year the automobile is used, and its salvage or resale value is expected to decrease by 20% per year. What is the economic life of the vehicle if the rate of interest is 5%?

Reference no: EM132033580

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