Suppose that a new car costs of $10000 and that annual operating cost and resale value of the car are shown in table. If I have a new car now, determine a replacement policy that minimizes the net cost of owning and operating a car for the next six years.
Age of Car Resale Value Operating Cost ($)
1 7000 300
2 6000 500
3 4000 800
4 3000 1200
5 2000 1600
6 1000 2200