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    Figure 12.7: Equivalent Annual Costs As A Function of Miles Driven

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    cutefrenzy
    This document compares the equivalent annual costs of owning a used car versus a new car over time. It provides a table with the initial costs, maintenance costs, fuel costs, and lifetime for a used ($3,000, $1,500/year, $0.20/mile, 4 years) and new ($8,000, $1,000/year, $0.05/mile, 5 years) car. A chart shows that the break-even point, where equivalent annual costs are equal, occurs around 5,000 miles driven. A second table lists the annual costs over 20 years for each car, with the total costs being $22,225.61 for the used car and $22,762

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    Figure 12.7: Equivalent Annual Costs As A Function of Miles Driven

    Uploaded by

    cutefrenzy
    18 views3 pages
    This document compares the equivalent annual costs of owning a used car versus a new car over time. It provides a table with the initial costs, maintenance costs, fuel costs, and lifetime for a used ($3,000, $1,500/year, $0.20/mile, 4 years) and new ($8,000, $1,000/year, $0.05/mile, 5 years) car. A chart shows that the break-even point, where equivalent annual costs are equal, occurs around 5,000 miles driven. A second table lists the annual costs over 20 years for each car, with the total costs being $22,225.61 for the used car and $22,762

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    This document compares the equivalent annual costs of owning a used car versus a new car over time. It provides a table with the initial costs, maintenance costs, fuel costs, and lifetime for a used ($3,000, $1,500/year, $0.20/mile, 4 years) and new ($8,000, $1,000/year, $0.05/mile, 5 years) car. A chart shows that the break-even point, where equivalent annual costs are equal, occurs around 5,000 miles driven. A second table lists the annual costs over 20 years for each car, with the total costs being $22,225.61 for the used car and $22,762

    Copyright:

    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd
    Download as xls, pdf, or txt
    18 views3 pages

    Figure 12.7: Equivalent Annual Costs As A Function of Miles Driven

    Uploaded by

    cutefrenzy
    This document compares the equivalent annual costs of owning a used car versus a new car over time. It provides a table with the initial costs, maintenance costs, fuel costs, and lifetime for a used ($3,000, $1,500/year, $0.20/mile, 4 years) and new ($8,000, $1,000/year, $0.05/mile, 5 years) car. A chart shows that the break-even point, where equivalent annual costs are equal, occurs around 5,000 miles driven. A second table lists the annual costs over 20 years for each car, with the total costs being $22,225.61 for the used car and $22,762

    Copyright:

    © All Rights Reserved
    Download as XLS, PDF, TXT or read online from Scribd
    Download as xls, pdf, or txt
    of 3

    Chart1

    Figure 12.7: Equivalent Annual Costs as a function of Miles Driven


    $$(500)
    $(1,000)

    Equivalent Annual Cost

    $(1,500)
    $(2,000)
    $(2,500)
    $(3,000)

    Break Even Point


    $(3,500)
    $(4,000)
    $(4,500)
    $(5,000)
    1000

    2000

    3000

    4000

    5000

    6000

    7000

    8000

    Miles Driven
    Equivalent Annuity - Used Car

    Page 1

    Equivalent Annuity - New Car

    9000

    10000

    Equivalent Annuity
    Used Car
    New Car
    Initial cost
    $3,000
    $8,000
    Maintenance costs/year
    $1,500
    1000
    Fuel costs/mile
    $0.20
    $0.05
    Lifetime
    4
    5
    Number of miles driven=
    5000
    Discount Rate for analysis =
    15%
    Net present value =
    Equivalent Annuity =

    $ (10,137.45) $ (12,190.19)
    $ (3,550.80) $ (3,636.52)
    Break-even Chart
    Number of Miles
    Equivalent Annuity
    Equivalent
    - Used Annuity
    Car
    - New Car
    1000 $
    (2,751) $
    (3,437)
    2000 $
    (2,951) $
    (3,487)
    3000 $
    (3,151) $
    (3,537)
    4000 $
    (3,351) $
    (3,587)
    5000 $
    (3,551) $
    (3,637)
    6000 $
    (3,751) $
    (3,687)
    7000 $
    (3,951) $
    (3,737)
    8000 $
    (4,151) $
    (3,787)
    9000 $
    (4,351) $
    (3,837)
    10000 $
    (4,551) $
    (3,887)

    Page 2

    Equal Lives
    Year
    0
    1
    2
    3
    4
    5
    6
    7
    8
    9
    10
    11
    12
    13
    14
    15
    16
    17
    18
    19
    20

    Old Car
    -3000

    -3000

    -3000

    -3000

    -3000

    Old Car Costs


    Old Car: Total CostNew Car New Car Costs
    -3000
    -8000
    -8000
    -2500
    -2500
    -1250
    -1250
    -2500
    -2500
    -1250
    -1250
    -2500
    -2500
    -1250
    -1250
    -2500
    -5500
    -1250
    -1250
    -2500
    -2500
    -8000
    -1250
    -9250
    -2500
    -2500
    -1250
    -1250
    -2500
    -2500
    -1250
    -1250
    -2500
    -5500
    -1250
    -1250
    -2500
    -2500
    -1250
    -1250
    -2500
    -2500
    -8000
    -1250
    -9250
    -2500
    -2500
    -1250
    -1250
    -2500
    -5500
    -1250
    -1250
    -2500
    -2500
    -1250
    -1250
    -2500
    -2500
    -1250
    -1250
    -2500
    -2500
    -8000
    -1250
    -9250
    -2500
    -5500
    -1250
    -1250
    -2500
    -2500
    -1250
    -1250
    -2500
    -2500
    -1250
    -1250
    -2500
    -2500
    -1250
    -1250
    -2500
    -2500
    -1250
    -1250
    ($22,225.61)
    ($22,762.21)

    Page 3

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