Homework Help is Here – Start Your Trial Now!
Business
Accounting
For Ruth, one of the most exciting aspects of landing a full-time job was being able to buy a different car! Even though she will be working in an urban area, she will need a reliable vehicle to travel to client locations outside the city. Ruth is trying to decide if she should buy a new vehicle or a slightly used vehicle, or lease a new(er) vehicle. She has had her eye on a dazzling blue SUV; it stares at her every time she drives by the lot. But she's not sure if she can justify its cost. Here are the costs and benefits she has gathered for each of these options: Buy New Buy Used Lease Midnight-Blue SUV Monthly payment $550 $350 Excellent for next 40,000 miles $320 plus $2 per mile if over 10,000 miles per year 2 years Excellent for length of lease Time frame 6 years 4 years Warranty Excellent for 100,000 miles only Full coverage insurance $215 per month $160 per month Operating cost $0.20 per mile $0.20 per mile Expected mileage per 13,800 13,800 year Safety features Maximum Moderate (a) * Your answer is incorrect. $195 per month $0.20 per mile 13,800 Maximum Identify the relevant costs associated with each of Ruth's three options. (Round answers to 2 decimal places, e.g. 15.25.) Total average monthly cost Buy New 995 Buy Used 740 Lease Midnight Blue SUV 1378.33

For Ruth, one of the most exciting aspects of landing a full-time job was being able to buy a different car! Even though she will be working in an urban area, she will need a reliable vehicle to travel to client locations outside the city. Ruth is trying to decide if she should buy a new vehicle or a slightly used vehicle, or lease a new(er) vehicle. She has had her eye on a dazzling blue SUV; it stares at her every time she drives by the lot. But she's not sure if she can justify its cost. Here are the costs and benefits she has gathered for each of these options: Buy New Buy Used Lease Midnight-Blue SUV Monthly payment $550 $350 Excellent for next 40,000 miles $320 plus $2 per mile if over 10,000 miles per year 2 years Excellent for length of lease Time frame 6 years 4 years Warranty Excellent for 100,000 miles only Full coverage insurance $215 per month $160 per month Operating cost $0.20 per mile $0.20 per mile Expected mileage per 13,800 13,800 year Safety features Maximum Moderate (a) * Your answer is incorrect. $195 per month $0.20 per mile 13,800 Maximum Identify the relevant costs associated with each of Ruth's three options. (Round answers to 2 decimal places, e.g. 15.25.) Total average monthly cost Buy New 995 Buy Used 740 Lease Midnight Blue SUV 1378.33

CONCEPTS IN FED.TAX.,2020-W/ACCESS
CONCEPTS IN FED.TAX.,2020-W/ACCESS
20th Edition
ISBN:9780357110362
Author:Murphy
Publisher:Murphy
Chapter5: Introduction To Business Expenses
Section: Chapter Questions
Problem 41P
See similar textbooks
icon
Related questions
Question
For Ruth, one of the most exciting aspects of landing a full-time job was being able to buy a different car! Even though she will be working in an urban area, she will need a reliable vehicle to travel to client locations outside the city. Ruth is trying to decide if she should buy a new vehicle or a slightly used vehicle, or lease a new(er) vehicle. She has had her eye on a dazzling blue SUV; it stares at her every time she drives by the lot. But she's not sure if she can justify its cost. Here are the costs and benefits she has gathered for each of these options: Buy New Buy Used Lease Midnight-Blue SUV Monthly payment $550 $350 Excellent for next 40,000 miles $320 plus $2 per mile if over 10,000 miles per year 2 years Excellent for length of lease Time frame 6 years 4 years Warranty Excellent for 100,000 miles only Full coverage insurance $215 per month $160 per month Operating cost $0.20 per mile $0.20 per mile Expected mileage per 13,800 13,800 year Safety features Maximum Moderate (a) * Your answer is incorrect. $195 per month $0.20 per mile 13,800 Maximum Identify the relevant costs associated with each of Ruth's three options. (Round answers to 2 decimal places, e.g. 15.25.) Total average monthly cost Buy New 995 Buy Used 740 Lease Midnight Blue SUV 1378.33
Transcribed Image Text:For Ruth, one of the most exciting aspects of landing a full-time job was being able to buy a different car! Even though she will be working in an urban area, she will need a reliable vehicle to travel to client locations outside the city. Ruth is trying to decide if she should buy a new vehicle or a slightly used vehicle, or lease a new(er) vehicle. She has had her eye on a dazzling blue SUV; it stares at her every time she drives by the lot. But she's not sure if she can justify its cost. Here are the costs and benefits she has gathered for each of these options: Buy New Buy Used Lease Midnight-Blue SUV Monthly payment $550 $350 Excellent for next 40,000 miles $320 plus $2 per mile if over 10,000 miles per year 2 years Excellent for length of lease Time frame 6 years 4 years Warranty Excellent for 100,000 miles only Full coverage insurance $215 per month $160 per month Operating cost $0.20 per mile $0.20 per mile Expected mileage per 13,800 13,800 year Safety features Maximum Moderate (a) * Your answer is incorrect. $195 per month $0.20 per mile 13,800 Maximum Identify the relevant costs associated with each of Ruth's three options. (Round answers to 2 decimal places, e.g. 15.25.) Total average monthly cost Buy New 995 Buy Used 740 Lease Midnight Blue SUV 1378.33
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
CONCEPTS IN FED.TAX., 2020-W/ACCESS
CONCEPTS IN FED.TAX., 2020-W/ACCESS
Accounting
ISBN:
9780357110362
Author:
Murphy
Publisher:
CENGAGE L
College Accounting, Chapters 1-27
College Accounting, Chapters 1-27
Accounting
ISBN:
9781337794756
Author:
HEINTZ, James A.
Publisher:
Cengage Learning,
Cornerstones of Cost Management (Cornerstones Ser…
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS