Two plans are available for a company to obtain automobiles for its salesmen. How m

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter17: Long-term Investment Analysis
Section: Chapter Questions
Problem 10E
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Two plans are available for a company to obtain automobiles for its salesmen. How many miles must the cars be driven each year for the two plans to have the same costs? Use an interest rate of 10%. Plan A: Lease the cars and pay PO.43 per mile. Plan B: Purchase the cars for ₱6,751 and economic life of three years after which it can be sold for ₱1,360. Gas and oil cost ₱0.12 per mile. Insurance is ₱500 per year.
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