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(Solution Download) Kristen Lu purchased a used automobile for $25,950 at the beginning of last year and incurred the fo


 

 

 

 

 

 

 

Kristen Lu purchased a used automobile for $25,950 at the

 

beginning of last year and incurred the following operating

 

costs:

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Depreciation

 

($25,950 Af· 5 years)

$5,190
  Insurance$2,700
  Garage rent$1,400
  Automobile tax and

 

license

$710
  Variable operating

 

cost

$0.10 per

 

mile

 

  

 

 

 

 

 

 

 

 

The variable operating cost consists of gasoline, oil, tires,

 

maintenance, and repairs. Kristen estimates that, at her current

 

rate of usage, the car will have zero resale value in five years,

 

so the annual straight-line depreciation is $5,190. The car is kept

 

in a garage for a monthly fee.

 


 

 

 


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