Question: For the data in Problem assume that the 5000, 10,000, and 15,000 mileage values are, respectively, pessimistic, most likely, and optimistic estimates. Use a weighted estimate to calculate the equivalent annual cost.
Problem: The purchase of a used pickup for $9000 is being considered. Records for other vehicles show that costs for oil, tires, and repairs about equal the cost for fuel. Fuel costs are $990 per year if the truck is driven 10,000 miles. The salvage value after 5 years of use drops about 8% per mile. Find the equivalent uniform annual cost if the interest rate is 8%. How much does this change if the annual mileage is 15,000? 5000?