A practicing doctor now spends Rs. 12 per km on taxi fare for his visit to patient’s residence. He is considering two other alternatives, the purchase of a new small car or an old big car. The estimated cost figures are: New small car Old big car Fixed Expenses Rs. 60,000 Rs. 45,000 Petrol consumption, per litre 10k.m. 7 K.m. Cost of petrol per litre Rs. 70.00 Rs. 70.00 He estimates that he runs 12,000 km annually. Decide: a. Which of the alternatives will be cheaper? b. If his practice increases and he has to run 20,000 km p.a., What he should opt for out of these three? c. At how many km per annum will the cost of the two cars break- even? What should be his decision?
A practicing doctor now spends Rs. 12 per km on taxi fare for his visit to patient’s residence. He is considering two other alternatives, the purchase of a new small car or an old big car. The estimated cost figures are:
|
|
New small car |
Old big car |
|
Fixed Expenses |
Rs. 60,000 |
Rs. 45,000 |
|
Petrol consumption, per litre |
10k.m. |
7 K.m. |
|
Cost of petrol per litre |
Rs. 70.00 |
Rs. 70.00 |
He estimates that he runs 12,000 km annually.
Decide:
a. Which of the alternatives will be cheaper?
b. If his practice increases and he has to run 20,000 km p.a., What he should opt for out of these three?
c. At how many km per annum will the cost of the two cars break- even? What should be his decision?
Step by step
Solved in 4 steps with 5 images
