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.46 per mile. Plan B: Purchase the cars for P8,868 and economic life of three years after which it can be sold for P1,381. Gas and oil cost PO.09 per mile. Insurance is P500 per year.

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.46 per mile. Plan B: Purchase the cars for P8,868 and economic life of three years after which it can be sold for P1,381. Gas and oil cost PO.09 per mile. Insurance is P500 per year.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 5.4IP

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