Compute equivalent annual cost

Assignment Help Macroeconomics
Reference no: EM1370655

An engineering student requires to replace the battery in her car so that she can drive home for a vacation after Spring Semester. She has located following possibilities:

Battery Warranty Battery Cost

2 years $25

3 years $35

5 years $55

Assume the warranty period represents the life of the battery and that any money not spent on the battery will be left in her bank account which is currently drawing 3.5% interest.

1. The equivalent annual cost of the 2 year battery is:
(Express your answer to the nearest 1/10 dollar: XX.X0)

2. The equivalent annual cost of the 3 year battery is:
(Express your answer to the nearest 1/10 dollar: XX.X0)

3. Which battery should she buy?
2 Year
3 Year
5 Year


Reference no: EM1370655

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