Question

Consider the following situation, which involves two options. Determine which option is less expensive. Are there unstated factors that might attect your decision? You currenty drive 400 miles per week in a car that gets 24 miles per gallon of gas. You are considering buying a new fuel-efficient car for $17,000 ( a rtrade-in on your current car) that gets 44 miles per gallon Insurance premiums for the new and old car are $800 and $400 per year, respectively. You anticipate spending $1300 per year on repairs for the old car and having no repairs on the new car. Assume gas costs $3.50 per gallon. Over a five year period, is it loss expensive to keep your old car or buy the new car? Over a five-year period, the cost of the old car is (Round to the nearest dollar as needed) and the cost of the new car is Thus, over a five-year period, it is less expensive to

Answer 1

Ans:- In this question, we need to find out that which car will be less expensive to keep. First, we need to find out the total costs of an old car and the new car separately.

Costing for old:- It is given that 400 miles per week is driven by the car and it requires 24 miles per gallon of gas.

  Therefore the gallons per week will be 400/24 = 16.67. The number of gallons required in 5 years will be 16.67 * 52 * 5 = 4333.34.

Note:- 52 is the number of weeks in a year.

Gas costs $3.5 per gallon is given. The total cost of Gallons in 5 years will be $3.5 * 4333.34 = $15166.67.

Insurance Premium costs for an old car is given $400.Total Insurance Premium costs in 5 years will be $400 * 5 = $2,000.

The maintenance cost is given $1,300 per year. Its total cost in 5 years will be $1,300 * 5 = $6,500.

Total costs for the old car will be $15,166.67 + $2,000 + $6,500.= $23,666.67.

Costing for the new car:-It is given that 400 miles per week is driven by the car and it requires 48 miles per gallon of gas.

  Therefore the gallons per week will be 400/48 = 8.33. Number of gallons required in 5 years will be 8.33 * 52 * 5 = 2166.67

Gas costs $3.5 per gallon is given. The total cost of Gallon in 5 years will be $3.5 * 2166.67 = $7583.33

Insurance Premium costs for the new car is given $800 per year.Total Insurance Premium costs in 5 years will be $800 * 5 = $4,000

Total costs for the New car will be $17,000 + $7583.33 + $4,000 = $28,583.33.

Therefore over period of 5 years it less expensive to keep your old car.

Note:- If this answer helps you pls give thumbs up.

.