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Solution Question 3_25 with Discounting

# Solution Question 3_25 with Discounting - Data New Car...

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Data New Car Discount Factor Purchase Price \$15,000.00 Available Cash \$5,500.00 Loan Amount \$9,500.00 Monthly Payment (\$201.85) NPV MP's YEAR 1 (\$2,295.91) NPV MP's YEAR 2 (\$2,078.29) NPV MP's YEAR 3 (\$1,881.29) Present Value 12 Maintentance Cost Year 1 (\$100.00) 0.91 (\$90.52) 24 Maintentance Cost Year 2 (\$300.00) 0.82 (\$245.82) 36 Maintentance Cost Year 3 (\$300.00) 0.74 (\$222.52) 36 Salvage Value \$3,626.00 0.74 \$2,689.55 Yearly Interest Rate 10.00% Montly Interest Rate 0.83%

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Data Used Car Montly Interest Rate 0.83% Purchase Price \$5,500.00 Available Cash \$5,500.00 Loan Amount \$0.00 Discount Factor 12 Fixed Maintentance Cost Year 1 (\$150.00) 0.91 24 Fixed Maintentance Cost Year 2 (\$200.00) 0.82 Amount Probability Discount Factor 12 Unknown Maintenance Cost Year 1 (\$500.00) 20.00% 0.91 12 (\$1,500.00) 60.00% 0.91 12 (\$2,500.00) 20.00% 0.91 Amount Probability 24 Unknown Maintenance Cost Year 2 (\$500.00) 20.00% 0.82 24 (\$1,500.00) 60.00% 0.82 24 (\$2,500.00) 20.00% 0.82 Amount Probability 36 Unknown Maintenance Cost Year 3 (\$500.00) 20.00% 0.74 36 (\$1,500.00) 60.00% 0.74 36 (\$2,500.00) 20.00% 0.74 36 Salvage Value \$2,000.00 0.74
Present Value (\$135.78) (\$163.88) (\$452.61) (\$1,357.82) (\$2,263.03) (\$409.70) (\$1,229.11) (\$2,048.52) (\$370.87) (\$1,112.61) (\$1,854.35) \$1,483.48

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Annual Interest 10.00% #ADDIN? #ADDIN? Chance (\$5,500.00) #ADDIN? 100.0% Chance (\$2,386.43) #ADDIN? 100.0% (\$2,324.11) Decision #ADDIN? 20.0% (\$609.70) 20.0% Year 2 (\$588.39) #ADDIN? 60.0% (\$1,429.11) 20.0% (\$2,248.52) #ADDIN? Year 1 (\$5,500.00) #ADDIN? 60.0% Reference (\$1,493.60) #ADDIN? 20.0% Reference (\$2,398.81) #ADDIN? Car Decision New Car Used Car Year 1 Year 2 Low Medium High Low Medium High

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Solution Question 3_25 with Discounting - Data New Car...

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