Calculating Annual Cost
Not what you're looking for?
Purchasing a Battery:
An engineering student needs to replace the battery in her car so that she can drive home for a vacation after Spring Semester. She has located the following possibilities:
Battery Warranty Battery Cost
2 years $25
3 years $35
5 years $55
Assume the warranty period represents the life of the battery and that any money not spent on the battery will be left in her bank account which is currently drawing 3.5% interest.
Questions:
1. The equivalent annual cost of the 2 year battery is:
(Express your answer to the nearest 1/10 dollar: XX.X0)
2. The equivalent annual cost of the 3 year battery is:
(Express your answer to the nearest 1/10 dollar: XX.X0)
3. Which battery should she buy?
2 Year
3 Year
5 Year.
Purchase this Solution
Solution Summary
The solution calculates the annual cost. The possibilities of replacing batteries are provided.
Solution Preview
Since money can be invested in the bank of 3.5% interest, this is the opportunity cost and discount rate for computing equivalent annual costs. We assume that equivalent annual costs are paid at the beginning of each year.
1. If ...
Purchase this Solution
Free BrainMass Quizzes
Economic Issues and Concepts
This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.
Elementary Microeconomics
This quiz reviews the basic concept of supply and demand analysis.
Pricing Strategies
Discussion about various pricing techniques of profit-seeking firms.
Economics, Basic Concepts, Demand-Supply-Equilibrium
The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.
Basics of Economics
Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.