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Business, 26.06.2019 19:50 Izzyfizzy

The present price (year 0) of kerosene is $4.30 per gallon, and its cost is expected increase by 10% per year. (at the end of year 1, kerosene will cost $4.73 per gallon.) mr. garcia uses about 800 gallons of kerosene for space heating during a winter season. he has an opportunity to buy a storage tank for $600, and at the end of four years, he can sell the storage tank for $100. the tank has a capacity to supply 4 years of mr. garcia's heating needs. so, he can buy four years worth of kerosene at its present price ($4.30), or he can invest his money elsewhere at 6% interest. should he purchase the storage tank? assume that kerosene purchased on a pay-as-you-go basis is paid for eoy (end of year). (however, kerosene purchased for the storage tank is purchased now.)

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The present price (year 0) of kerosene is $4.30 per gallon, and its cost is expected increase by 10%...
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