An independent over-the-road (OTR) truck driverowner paid $68,000 for a used tractor-trailer. The salvage value of the rig after 5 more years of use is expected to be $36,000. The operating cost is $0.50 per mile and the base mileage rate (i.e., revenue) is $0.61 per mile. (a) How many miles per year must the owner drive just to break even at an interest rate of 10% per year? (b) If the owner drives 600 miles per day, how many days per year will be required for break even?
An independent over-the-road (OTR) truck driverowner paid $68,000 for a used tractor-trailer. The salvage value of the rig after 5 more years of use is expected to be $36,000. The operating cost is $0.50 per mile and the base mileage rate (i.e., revenue) is $0.61 per mile. (a) How many miles per year must the owner drive just to break even at an interest rate of 10% per year? (b) If the owner drives 600 miles per day, how many days per year will be required for break even?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
An independent over-the-road (OTR) truck driverowner
paid $68,000 for a used tractor-trailer. The
salvage value of the rig after 5 more years of use is
expected to be $36,000. The operating cost is
$0.50 per mile and the base mileage rate (i.e., revenue)
is $0.61 per mile.
(a) How many miles per year must the owner
drive just to break even at an interest rate of
10% per year?
(b) If the owner drives 600 miles per day, how
many days per year will be required for break
even?
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