Final answer:
The engineer's yearly return on investment for the car is $150 per year, calculated by accounting for the initial purchase price, the annual maintenance costs, and the final selling price after 20 years.
Step-by-step explanation:
The student's question asks about calculating the yearly return on investment for a car that was bought for $8,000, sold for $23,000 after 20 years, and had annual expenses of $600 for maintenance and modifications. To determine the yearly return, we must account for both the initial investment and the ongoing costs.
Total investment = Initial cost + (Annual maintenance expenses × Number of years)
Total investment = $8,000 + ($600 × 20)
Total investment = $8,000 + $12,000
Total investment = $20,000
The total profit from the car sale is the selling price minus the total investment:
Total profit = Selling price - Total investment
Total profit = $23,000 - $20,000
Total profit = $3,000
The yearly return is then the total profit divided by the number of years of the investment:
Yearly return = Total profit / Number of years
Yearly return = $3,000 / 20
Yearly return = $150 per year