Say your parents give you a car for your birthday. It is not the new model you wanted, but it's in very good condition. They bought it used for $15,000 (market value). The cost of keeping the car to you is (not counting maintenance and operation cost) is:

To calculate the cost of keeping the car, we need to consider the depreciation of the car's value over time.

The depreciation of a car's value varies based on factors such as mileage, age, and condition. One commonly used method to estimate depreciation is the straight-line method, which assumes a constant depreciation rate over the car's useful life.

To calculate the annual depreciation of the car, we first need to determine its useful life. Let's assume a useful life of 10 years for this car.

Step 1: Calculate the annual depreciation
Annual depreciation = (Initial value - Residual value) / Useful life

The initial value is the market value of the car when it was bought, which is $15,000 in this case. The residual value is the estimated value of the car at the end of its useful life, which can vary depending on factors such as demand and condition. Let's assume a residual value of $5,000 for this car.

Annual depreciation = ($15,000 - $5,000) / 10 = $1,000

Step 2: Calculate the cost of keeping the car
The cost of keeping the car is the annual depreciation plus any other costs you might have, such as insurance, registration fees, and parking expenses.

Let's assume that, in addition to the annual depreciation, you have an average annual cost of $1,500 for insurance, registration, and other expenses.

Cost of keeping the car = Annual depreciation + Other costs = $1,000 + $1,500 = $2,500 per year

So, the cost of keeping the car (excluding maintenance and operation costs) would be $2,500 per year.