Part 1 (1 point)
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Suppose you are considering becoming a driver for Uver, a new ride service in your town. You estimate you can buy a car that will be of
acceptable Uver standards with $24,000.00 that you saved up. The car is electric, and with free charging stations all over town, you do
not have any expenses for using the car.
You expect that the car will be useful as an Uver car for the next 3 years. After the 3 years, the battery will be depleted, so the car will
not be worth much anymore. The car therefore will not have any residual value after 3 years.
You expect to make $12,000.00 per year as an Uver driver. Uver, however, has an odd business model: they pay their drivers at the end
of the year. Therefore, while you will spend the $24,000.00 on the car today, you will receive your first $12,000.00 1 year from now, the
next $12,000.00 a year after that, and the last $12,000.00 1 year after that.
Suppose the interest rate is 20.00%. The net present value of becoming an Uver driver is
decimals.
854420
. Give your answer to two
Part 2 (1 point)
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Suppose the interest rate were instead 33%. You would
certainly still?
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