Kristen Lu purchased a used automobile for $15,850 at the beginning of last year and incurred the following operating costs:

Depreciation ($15,850 ÷ 5 years)	$3,170
Insurance	$1,600
Garage rent	$800
Automobile tax and license	$430
Variable operating cost	$0.07 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 $3,170. The car is kept in a garage for a monthly fee.

Required:

1.	Kristen drove the car 12,000 miles last year. Compute the average cost per mile of owning and operating the car. (Round your answers to 2 decimal places.)

2.

Kristen is unsure about whether she should use her own car or rent a car to go on an extended cross-country trip for two weeks during spring break. What costs above are relevant in this decision? (You may select more than one answer. Single click the box with a check mark for correct answers and double click to empty the box for the wrong answers.)

	Variable operating costs
	Depreciation
	Automobile tax
	License costs
	Insurance costs

Answer rating: 100% (QA)

Average cost per mile is Particulars Depreciation Insurance Garage rent Automobile tax and license V... View the full answer