Laurie wants to buy a used sports car. She is looking at three: 1)a 3-year old Porsche 911 Turbo Cabriolet; 2)a 4-year old Ferrari F430; or 3)a 4-year old Lamborghini Gallardo. The purchase price, annual operating costs and resale value for each car is given in the table, below. Laurie wants to buy the cheapest of the three cars. Which should she buy? Cash flows for Sports Cars ($000s)
$$\begin{array} { | c | c | c | c | }
\hline \text { Time } & \text { Porsche } & \text { Ferrari } & \text { Lamborghini } \
\hline 0 & - 150 & - 206 & - 190 \
\hline 1 & - 6 & - 6 & - 6 \
\hline 2 & - 6 & - 6 & 139 \
\hline 3 & - 6 & 134 & 0 \
\hline 4 & - 6 & 0 & 0 \
\hline 5 & 70 & 0 & 0 \
\hline \mathrm { n } & 5 & 3 & 2 \
\hline \text { NPV } = & - \$ 169.87 & - \$ 110.33 & - \$ 76.39 \
\hline \text { PVIFA } & 3.99271 & 2.577097 & 1.783265 \
\hline
\end{array}$$

Question

Laurie wants to buy a used sports car. She is looking at three: 1)a 3-year old Porsche 911 Turbo Cabriolet; 2)a 4-year old Ferrari F430; or 3)a 4-year old Lamborghini Gallardo. The purchase price, annual operating costs and resale value for each car is given in the table, below. Laurie wants to buy the cheapest of the three cars. Which should she buy? Cash flows for Sports Cars ($000s)
$$\begin{array} { | c | c | c | c | } 
\hline \text { Time } & \text { Porsche } & \text { Ferrari } & \text { Lamborghini } \
\hline 0 & - 150 & - 206 & - 190 \
\hline 1 & - 6 & - 6 & - 6 \
\hline 2 & - 6 & - 6 & 139 \
\hline 3 & - 6 & 134 & 0 \
\hline 4 & - 6 & 0 & 0 \
\hline 5 & 70 & 0 & 0 \
\hline \mathrm { n } & 5 & 3 & 2 \
\hline \text { NPV } = & - \$ 169.87 & - \$ 110.33 & - \$ 76.39 \
\hline \text { PVIFA } & 3.99271 & 2.577097 & 1.783265 \
\hline
\end{array}$$

Quizplus · Accepted Answer

The Answer of Laurie wants to buy a used sports car. She is looking at three: 1)a 3-year old Porsche 911 Turbo Cabriolet; 2)a 4-year old Ferrari F430; or 3)a 4-year old Lamborghini Gallardo. The purchase price, annual operating costs and resale value for each car is given in the table, below. Laurie wants to buy the cheapest of the three cars. Which should she buy? Cash flows for Sports Cars ($000s)
$$\begin{array} { | c | c | c | c | } 
\hline \text { Time } & \text { Porsche } & \text { Ferrari } & \text { Lamborghini } \
\hline 0 & - 150 & - 206 & - 190 \
\hline 1 & - 6 & - 6 & - 6 \
\hline 2 & - 6 & - 6 & 139 \
\hline 3 & - 6 & 134 & 0 \
\hline 4 & - 6 & 0 & 0 \
\hline 5 & 70 & 0 & 0 \
\hline \mathrm { n } & 5 & 3 & 2 \
\hline \text { NPV } = & - \$ 169.87 & - \$ 110.33 & - \$ 76.39 \
\hline \text { PVIFA } & 3.99271 & 2.577097 & 1.783265 \
\hline
\end{array}$$

Laurie Wants to Buy a Used Sports Car A)Porsche B)Ferrari C)Lamborghini D)Either the Ferrari or the Lamborghini (Both

Laurie Wants to Buy a Used Sports Car A)Porsche
B)Ferrari
C)Lamborghini
D)Either the Ferrari or the Lamborghini (Both