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

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) $1,625.40
B) $1,584.63
C) $1,469.08
D) $1,409.54