Problem:
You just purchased a used car for $3,000 and, being enrolled in this course, you are curious as to how long you should keep the car. You will graduate soon and you do not want to keep the car longer than 4 years. You have estimated the costs and market value as show in the following table.
Year 1 Year 2 Year 3 Year 4
Annual expense $950 $1050 $1,100 $1,500
Market value 2,250 1,800 1,450 1,160
at end of yr.
If your MARR is 12% per year, at the end of which year should you dispose of the car?