You Buy a New Car for $20 000

Multiple Choice

You buy a new car for $20 000. Its salvage value declines by declining-balance depreciation of 10% per year, while its maintenance costs are $500 in the first year and go up by $400 a year. If your MARR is 5%, what is the EAC to you of keeping it until it reaches the end of its economic life?

A) $4 358
B) $4 335
C) $4 327
D) $4 333
E) $4 352