Question

You are a fanatic when it comes to keeping records for your car. You calculate every penny spent on your car and know exactly how many miles you drive.

You drove 10,000 miles a year in 2018. Due to your great record keeping, you calculated that you spent $6,000 on your car in 2018.  These costs included the costs of gasoline, a set of 4 tires, 2 visits to the mechanic for routine maintenance, license and registration fees, depreciation, principal and interest on your car loan.

Your employer wants you to drive your own car to a conference for work. Your employer will pay you $0,57 cents per mile. Should you drive your own car or hitch a ride with someone else? Do you have enough information above to make that decision? Explain why or why not.

Answer 1

According to the records I drove 10,000 miles in 2018 and spent $6,000 on my car, which includes all types of costs. With this data we can find the expenditure on car per mile, which is $(6,000/10,000)= $0.6/mile.

My employer wants me to drive my own car to a conference, for which he will pay me $0.57/mile. According to the data I have of 2018, I shouldn't drive my own car to the conference. Because the employer will provide me $0.57/mile, while my expenditure on car is $0.6/mile. Since I calculate every penny I spend on my car, so this deal isn't worth it. I must hitch a ride with someone else.

Yes, I do have enough information to make the above decision. Because I'm considering my 2018's data to make a decision, which includes all types of expenses including depreciation, interest etc. With the help of the previous data I can have a rough average idea of the expenditure on my car per mile.