Question

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

250250

miles per week in a car that gets

2020

miles per gallon of gas. You are considering buying a new​ fuel-efficient car for

​$18 comma 00018,000

​(after trade-in on your current​ car) that gets

4343

miles per gallon. Insurance premiums for the new and old car are

​$10001000

and

​$400400

per​ year, respectively. You anticipate spending

​$10001000

per year on repairs for the old car and having no repairs on the new car. Assume gas costs

​$3.503.50

per gallon. Over a​ five-year period, is it less expensive to keep your old car or buy the new​ car?

Answer 1