You Can Minimize the Average Annual Depreciation on Your Car

question 7

Multiple Choice

You can minimize the average annual depreciation on your car by

• A)trading the old car each year for a new model.
• B)trading in the old car every three years for a new model.
• C)extending the holding period.
• D)choosing the loan with the lowest APR.

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Definitions:

Present Value

The value right now of a sum of money expected in the future or a sequence of cash inflows, factoring in a specific rate of return.

Discount Rate

This is the rate of interest utilized in the process of discounted cash flow analysis to calculate the current value of future cash flows.

Received

Amounts of money or assets that have been taken in by an individual or organization.

Years

Units of time measuring the duration or length of events or intervals typically consisting of 365.25 days in the Gregorian calendar.