Question 1096 equivalent annual cost
You're thinking of buying a car to travel around in, rather than paying $5,800 at the end of every year to use the train.
You can buy an old second hand car for $6,000 now (t=0), and sell it after 10 years for $3,000 (t=10). You estimate that the car will cost $5,500 per year in fuel, insurance, registration and maintenance, paid in arrears, so there will be 10 payments from t=1 to t=10 inclusive.
The required return is 10% pa. What’s the equivalent annual cost (EAC) of the car?