Required: 1. Kristen drove the car 11,000 miles last year. Compute the average cost per mile of owning and operating the car. (Round your answers to 2 decimal places.) Average fixed cost per mile Variable operating cost per mile Average cost per mile
Required: 1. Kristen drove the car 11,000 miles last year. Compute the average cost per mile of owning and operating the car. (Round your answers to 2 decimal places.) Average fixed cost per mile Variable operating cost per mile Average cost per mile
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 20P
Related questions
Question
Kristen Lu purchased a used automobile for $8,350 at the beginning of last year and incurred the following operating costs:
| $ 1,670 | ||
| Insurance | $ 900 | |
| Garage rent | $ 500 | |
| Automobile tax and license | $ 230 | |
| Variable operating cost | $ 0.11 | per mile |
The variable operating cost consists of gasoline, oil, tires, maintenance, and repairs. Kristen estimates that, at her current rate of usage, the car will have zero resale value in five years, so the annual straight-line depreciation is $1,670. The car is kept in a garage for a monthly fee.
Required:
1. Kristen drove the car 11,000 miles last year. Compute the average cost per mile of owning and operating the car. (Round your answers to 2 decimal places.)
Transcribed Image Text:Kristen Lu purchased a used automobile for $8,350 at the beginning of last year and incurred the following operating costs:
Depreciation ($8,350 ÷ 5 years)
Insurance
Garage rent
Automobile tax and license
Variable operating cost
Check my work
$ 1,670
$ 900
$500
$ 230
$ 0.11 per mile
The variable operating cost consists of gasoline, oil, tires, maintenance, and repairs. Kristen estimates that, at her current rate of usage,
the car will have zero resale value in five years, so the annual straight-line depreciation is $1,670. The car is kept in a garage for a
monthly fee.
Average fixed cost per mile
Variable operating cost per mile
Average cost per mile
Required:
1. Kristen drove the car 11,000 miles last year. Compute the average cost per mile of owning and operating the car. (Round your
answers to 2 decimal places.)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT