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 20, and insurance is $800 per year. Car B costs $29,350 and has an m

Question 784480: 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 20, and insurance is $800 per year. Car B costs $29,350 and has an mpg rating of 30, and insurance is $700 per year. Assume that the consumer drives 15,000 miles 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 for the total cost of car B to become less than that of car A.
Answer by xinxin(76) (Show Source): You can put this solution on YOUR website!
mpg = miles per gallon
Facts we know:
Car A: $20000, Cost of Gas 15000/20*3= $2250 per year, Insurance $800 per year
Car B: $29350, Cost of Gas 15000/30*3= $1500 per year, Insurance $700 per year
In order for costs of B < costs of A, the two have to be equal at first. Let N = the time it takes for costs to be equal, then:
20000+2250N+800N=29350+1500N+700N, N= 11
After 11 years the total cost of car B will become less than that of car A.
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