A company pays a sales representative 0.50 $ per kilometer in return for using its own car for company works. However, the company is considering another solution for this situation. So much so that the company will buy a car and make the car available to its representative. The data for this solution are as follows: The cost of buying such a car is 24,000
A company pays a sales representative 0.50 $ per kilometer in return for using its own car for company works. However, the company is considering another solution for this situation. So much so that the company will buy a car and make the car available to its representative. The data for this solution are as follows: The cost of buying such a car is 24,000 $ and it has a service life of 5 years. The market value at the end of this life is 7,000 $. The cost of keeping the car in a garage when it is not running is 2,500 $ per year, and the total fuel-tyre-maintenance costs are 0.30 $ per kilometer. If the interest rate is 15%, how many kilometers must the sales representative travel so that the costs of both methods are equal (break-even)? (please explain)
a) 42.356
b) 43.107
c) 44.226
d) 45.340
Step by step
Solved in 4 steps
