Automobile repair shops typically remind customers to change their oil and oil filter every 3,000 miles. Lets
Question:
Automobile repair shops typically remind customers to change their oil and oil filter every 3,000 miles. Let’s call this Strategy 1 . Usually you can save money by following another legitimate guideline——your automobile user’s manual. It suggests changing your oil every 5,000-7,000 miles. We’ll call this Strategy 2 .
To conserve a nonrenewable and valuable resource, you decide to follow Strategy 2 and change your oil every 5,000 miles (you are conservative). You drive an average of 15,000 miles per year, and you expect each oil change to cost $30. Usually you drive your car 90,000miles before trading it in on a new one.
(1) Develop a cash-flow diagram for each Strategy.
(2) If your personal MARR is 10% per year, how much will you save with Strategy 2 over Strategy 1 , expressed as a lump sum at the present time?
Engineering Economy
ISBN: 978-0132554909
15th edition
Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling