You have an old car worth $9,000 if sold today. You could overhaul this car at a cost of $5,000, and it would last you about 6 more years at which time you could sell it for $1,000. Alternately, you could purchase a new car. It would cost $22,000 and would last you approximately 6 years. After 6 years it would be worth $3,000. Your cost of funds is 10%. Prepare an evaluation of your choices. Show your work and indicate which of the alternatives you would choose.

Separate each car and the numbers

Cost of each car NOW
Cost of any additional costs ( repairs)
Cost of use of money( interest)

Minus the value of the car at the end of 6 years.

** but tell the teacher it is a bad car if a new one only lasts 6 years, tell her to buy a Ford.