Two plans are available for a company to obtain automobiles for its salesmen. How many miles must the cars be driven each year for the two plans to have the same costs? Use an interest rate of 10%. Plan A: Lease the cars and pay PO.46 per mile. Plan B: Purchase the cars for P8,868 and economic life of three years after which it can be sold for P1,381. Gas and oil cost PO.09 per mile. Insurance is P500 per year.

Two plans are available for a company to obtain automobiles for its salesmen. How many miles must the cars be driven each year for the two plans to have the same costs? Use an interest rate of 10%. Plan A: Lease the cars and pay PO.46 per mile. Plan B: Purchase the cars for P8,868 and economic life of three years after which it can be sold for P1,381. Gas and oil cost PO.09 per mile. Insurance is P500 per year.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter1: Introduction And Goals Of The Firm

Section: Chapter Questions

Problem 2.2CE

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