I am going to buy a family car at the beginning of the New Year. I am going to stay in the UK for the next 4 years. I am considering the possibility of being a customer of company A which sells BMW models. Not only I can buy a car from this company but I can also trade in my car at this company and have my car serviced by the company. Company A gives a warranty that the annual maintenance costs and trade-in prices will remain the same for the next 4 years. They are:
\begin{array}{cc}\hline\text{Age of Car}&\text{Annual Maintenance}&\text{Trade-in Price at the}\\&\text{Cost}&\text{end of the period}\\\hline0&{\it\unicode{xA3}}2,000&{\it\unicode{xA3}}6,000\\1&{\it\unicode{xA3}}4,000&{\it\unicode{xA3}}5,000\\2&{\it\unicode{xA3}}6,000&{\it\unicode{xA3}}4,000\\3&{\it\unicode{xA3}}7,000&{\it\unicode{xA3}}2,000\\\hline\end{array}
a) Suppose that I can buy a new car at £12000, a price which is fixed for the next 4 years. What strategy should I choose to minimize the net cost (purchasing costs + maintenance costs - money received in trade-ins) incurred during the next four years? Given the optimal strategy found, do I have to solve the problem again if the company changes the price from £12000 to £$x$ before I buy a car?
Solution to a)
Question: Could somebody please explain how do they get the values in the first table? Isn't the cost for using a car for 1 year supposed to be $2000+4000$?