Problema Solution
A married couple is trying to determine the best vehicle to purchase. They have narrowed it down to two vehicles, a hybrid model, and a non-hybrid model. They hybrid model costs $29,000 and gets 48 miles per gallon. The non-hybrid model has all the accessories of the hybrid, costs $20,500, and gets 32 miles per gallon. If the married couple plans of keeping and paying off the vehicle in 4 years and average 15,000 miles per year with the average cost of gas at $3.25 per gallon, which vehicle will cost less? Assume 0% financing over this period and same cost to maintain.
Answer provided by our tutors
the married couple plans of keeping and paying off the vehicle in 4 years and average 15,000 miles per year thus in four years they will make 4*150,000 = 600,000 miles
They hybrid model costs $29,000 and gets 48 miles per gallon:
the total gallons made in 4 years: 600,000 : 48 = 12,500 gal
the cost of 12,500 gal is: 12,500*3.25 = $40,625
the total money spent in 4 years will be: 29,000 + 40,625 = $69,625
The non-hybrid model costs $20,500, and gets 32 miles per gallon:
the total gallons made in 4 years: 600,000 : 32 = 18,750 gal
the cost of 18,750 gal is: 18,750*3.25 = $60,937.5
the total money spent in 4 years will be: 20,500 + 60,937.5 = $81,437.5
Since $69,625 < $81,437.5 the hybrid model will cost less.