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

question 87

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 4 more years.If your opportunity cost is 8%,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:

Working Backward

A problem-solving strategy that involves starting from the desired goal and using steps in reverse order to reach the initial condition.

Subgoals

Intermediate goals set within the path to achieve a larger, primary goal, often used to organize and direct efforts effectively.

Law School

An educational institution specializing in legal studies, where students are trained to become lawyers.

Intelligence

The capacity to obtain and utilize knowledge and abilities.