You're thinking of buying a car to travel around in, rather than paying $3,643 at the end of every year to use the train. You can buy an old second hand car for $4,000 now (t=0), and sell it after 14 years for $2,000 (t=14). You estimate that the car will cost $3,500 per year in fuel, insurance, registration and maintenance, paid in arrears, so there will be 14 payments from t=1 to t=14 inclusive. The required return is 7% pa. Select the most correct statement. The equivalent annual cost (EAC) of the car is:Select one:
a.$3,643 so the car and train are equally costly.
b.$3,715 so the train is cheaper than the car.
c.$3,869 so the train is cheaper than the car.
d.$5,832 so the train is cheaper than the car.