Question 1126218: Consider the following situation, which involves two options. Determine which option is less expensive. Are there unstated factors that might affect your decision?
You currently drive
330 miles per week in a car that gets
19 miles per gallon of gas. You are considering buying a new fuel-efficient car for
15,000 (after trade-in on your current car) that gets
43 miles per gallon. Insurance premiums for the new and old car are $
1000
700 per year, respectively. You anticipate spending $
1300
1300 per year on repairs for the old car and having no repairs on the new car. Assume gas costs $
3.00
3.00 per gallon. Over a five-year period, is it less expensive to keep your old car or buy the new car?
Over a five-year period, the cost of the old car is $
nothing
and the cost of the new car is $
nothing
. Thus, over a five-year period, it is less expensive to
▼
keep your old car.
buy the new car.
(Round to the nearest dollar as needed.)
Answer by Boreal(15235)   (Show Source):
You can put this solution on YOUR website! Gas cost for old car is 52*330*$3/19 or $2709.47.
For 5 years it is $13547.37 +$3500 insurance +6500 on repairs or $23,547.37
For the new car the cost is 52*330*$3/43 or $1197.21, for 5 years $5986.05
Add to that $5000 for insurance and $15000 for purchase, and total is $25,986.95
It is slightly more expensive to buy a new car over the five year period.
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