You are deciding whether to buy a new or a two-year-oldcar (of the same make) based on
Chapter 9, Problem 58(choose chapter or problem)
You are deciding whether to buy a new or a two-year-oldcar (of the same make) based on which will have costyou less when you resell it at the end of three years. Yourcost consists of two parts: the loss in value of the car andthe repairs. A new car costs $20,000 and loses 12% ofits value each year. Repairs are $400 the first year andincrease by 18% each subsequent year.(a) For a new car, find the first three terms of the sequencedn giving the depreciation (loss of value) indollars in year n. Give a formula for dn.(b) Find the first three terms of the sequence rn, the repaircost in dollars for a new car in year n. Give aformula for rn.(c) Find the total cost of owning a new car for threeyears.(d) Find the total cost of owning the two-year-old car forthree years. Which should you buy?
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