For Sarah, 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. Sarah 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: Monthly payment Time frame Warranty Full coverage insurance Operating cost Expected mileage per year Safety features (a) $520 6 years Excellent for 100,000 miles $195 per month $0.20 per mile 13,500 Buy New Maximum * Your answer is incorrect. Total average monthly cost $ Buy New $320 940 4 years Excellent for next 40,000 miles only $150 per month $0.20 per mile 13,500 Moderate Buy Used $ Identify the relevant costs associated with each of Sarah's three options. (Round answers to 2 decimal places, e.g. 15.25.) Buy Used 695 Lease Midnight-Blue SUV $290 plus $2 per mile if over 10,000 miles per year 2 years Excellent for length of lease $210 per month $0.20 per mile $ 13,500 Maximum Lease Midnight Blue SUV 1308.33
For Sarah, 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. Sarah 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: Monthly payment Time frame Warranty Full coverage insurance Operating cost Expected mileage per year Safety features (a) $520 6 years Excellent for 100,000 miles $195 per month $0.20 per mile 13,500 Buy New Maximum * Your answer is incorrect. Total average monthly cost $ Buy New $320 940 4 years Excellent for next 40,000 miles only $150 per month $0.20 per mile 13,500 Moderate Buy Used $ Identify the relevant costs associated with each of Sarah's three options. (Round answers to 2 decimal places, e.g. 15.25.) Buy Used 695 Lease Midnight-Blue SUV $290 plus $2 per mile if over 10,000 miles per year 2 years Excellent for length of lease $210 per month $0.20 per mile $ 13,500 Maximum Lease Midnight Blue SUV 1308.33
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:For Sarah, 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. Sarah 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:
Monthly payment
Time frame
Warranty
Full coverage insurance
Operating cost
Expected mileage per
year
Safety features
$520
6 years
Excellent for 100,000
miles
$195 per month
$0.20 per mile
13,500
Buy New
Maximum
* Your answer is incorrect.
Total average monthly cost $
Buy New
$320
940
4 years
Excellent for next 40,000 miles
only
$150 per month
$0.20 per mile
13.500
Moderate
Buy Used
Identify the relevant costs associated with each of Sarah's three options. (Round answers to 2 decimal places, e.g. 15.25.)
$
Buy Used
695
Lease Midnight-Blue SUV
$290 plus $2 per mile if
over
10,000 miles per year
2 years
Excellent for length of lease
$210 per month
$0.20 per mile
13,500
$
Maximum
Lease Midnight Blue SUV
1308.33
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