SOLUTION: You currently drive 360 miles per week in a car that gets 20 miles per gallon of gas. You are considering buying a new fuel-efficient car for $12,000 (after trade-in on your curre

Question 1032592: You currently drive 360 miles per week in a car that gets 20 miles per gallon of gas. You are
considering buying a new fuel-efficient car for $12,000 (after trade-in on your current car) that gets
60 miles per gallon. Insurance premiums for the new and old car are $900 and $600 per year,
respectively. You anticipate spending $1400 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 less
expensive to keep your old car or buy the new car? By how much?
A) the new car is $4420 less expensive
B) the new car is $3120 less expensive
C) the old car is $4420 less expensive
D) the old car is $3120 less expensive

Answer by mananth(16946) (Show Source): You can put this solution on YOUR website!

You currently drive 360 miles per week
in a car that gets 20 miles per gallon of gas.
Total cost on the old car
((360 miles per week *52 * 5years)/20) *3.50 $ + (600*5)+1400*5)
=$26380
Total cost on the new car
12000 + ((360*52*5)/60))*3.50 *(900*5)
=$21960
A) the new car is $4420 less expensive

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