Internal Rate of Return: PV = Zero

• Buy car A for $22,000; operating costs = 300/month; salvage value is $4000IRR = 48.2%@ 5 yr; 21.2% @ 10yr

• Buy car B for $14,000; operating costs = 400/month, salvage value is $1800IRR = 40.4% @ 5 yr; 14.9% @ 10yr

• Car B is cheaper because IRR is lower

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