Because of Its Age, Your Car Costs $4,000 Annually in Maintenance

question 34

Multiple Choice

Because of its age, your car costs $4,000 annually in maintenance expense.You could replace it with a newer vehicle costing $8,000.Both vehicles would be expected to last four more years.If your opportunity cost is 8 percent, by how much must maintenance expense decrease on the newer vehicle to justify its purchase?

• A)$1,250
• B)$1,585
• C)$2,000
• D)$2,415

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Definitions:

Data Accuracy

The degree to which data correctly reflects the real-world values it is intended to represent.

Advanced Planning Systems

Software solutions designed to improve the efficiency and effectiveness of supply chain and production planning through advanced computational algorithms.

Linear Approximations

A method for approximating the value of a function near a given point using the tangent line at that point.

Aggregate Plan

A plan for production, inventory, and stock levels over a medium range of time, aiming to balance demand and supply in a cost-effective manner.