Save in present value terms vs waiting to buy a car

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You own a 10-year-old car and are considering whether to buy a new car now. Your car will last three more years whereupon you will buy a new car. The new car cost $23,000 today and prices on new cars are rising 3% per year on average. Maintenance costs on the old car will average $1000 more than the new car for 3 years starting next year. Your savings account earns 4% compounded annually.

If you buy the car now, how much do you save in present value terms vs. waiting to buy the car?

State your answer to the nearest dollar.

Reference no: EM131442530

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