You are looking into buying an extended vehicle warranty on your car because someone suggested it was a good idea. Your vehicle is 5 years old with 50,000 mi. The maintenance cost is $2500 per year. It is expected to increase by $500 per year until year 12 when you donate the car to raise money for the Blind. Assume normal mileage. If the extended warranty cost cover all mechanical costs after a deduct of $1000/event. The annual extended warranty is $1500/year and you have 2 repairs per year. IS this a good deal. (hints – bring both the maintenance costs and the costs for the warranty, including deducts to the present. Note you are looking a the purchase when the vehicle is already 5 years old.) Assume the interest rate to consider is 4%
You are looking into buying an extended vehicle warranty on your car because someone suggested it was a good idea. Your vehicle is 5 years old with 50,000 mi. The maintenance cost is $2500 per year. It is expected to increase by $500 per year until year 12 when you donate the car to raise money for the Blind. Assume normal mileage. If the extended warranty cost cover all mechanical costs after a deduct of $1000/event. The annual extended warranty is $1500/year and you have 2 repairs per year. IS this a good deal. (hints – bring both the maintenance costs and the costs for the warranty, including deducts to the present. Note you are looking a the purchase when the vehicle is already 5 years old.) Assume the interest rate to consider is 4%
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