Choice and Cost Benefit Analysis > Present Value

Cost of Ownership of a Car

Suppose a car costs $20,000 in period 0, requires $1,000 of fuel in each of years 1-5 and is sold at the end of year 5 for $12,000. If the interest rate is 5%, what is the net present value of owning and driving the car?

Solution, PDF  

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Peter J Wilcoxen, The Maxwell School, Syracuse University
Revised 08/17/2016