Problema Solution
A consumer is trying to decide whether to purchase car A or car B. Car A costs $20,000 and has an mpg rating of 30, and insurance is $1,000 per year. Car B costs $24,000 and has an mpg rating of 50, and insurance is $1,200 per year. Assume the consumer drives 15,000 per year and that the price of gas remains constant at $3 per gallon. Based only on these facts, determine how long it will take fro the total cost of car B to become less than that of car A.
Answer provided by our tutors
total annual costs for car A:
(15000/30)*3 + 1000
total annual costs for car B:
(15000/50)*3 + 1200
let 'y' represent the number of years, then we want to solve for car B total cost less than car A total cost:
24000 + y((15000/50)*3 + 1200) < 20000 + y((15000/30)*3 + 1000)
solving for 'y' we have y>10
it will take 10 years before the cost equalize, so after ten years car B will have cost less than car A