Consider the following situation, which involves two options. Determine which option is less expensive. Are there unstated factors that might affect your decision?

You currently drive

250

miles per week in a car that gets

13

miles per gallon of gas. You are considering buying a new fuel-efficient car for

$17,000

(after trade-in on your current car) that gets

50

miles per gallon. Insurance premiums for the new and old car are

$1000

and

$500

per year, respectively. You anticipate spending

$1500

per year on repairs for the old car and having no repairs on the new car. Assume gas costs

$4.00

per gallon. Over a five-year period, is it less expensive to keep your old car or buy the new car?

Question content area bottom

Part 1

Over a five-year period, the cost of the old car is

$enter your response here

and the cost of the new car is

$enter your response here.

Thus, over a five-year period, it is less expensive to

buy the new car.

keep your old car.

(Round to the nearest dollar as needed.)

Part 2

Are there unstated factors that might affect your decision? Select all that apply.

A.

Government incentives to purchase a new fuel efficient car

B.

Any payments for purchasing the old car and number of payments remaining

C.

Inflation

D.

Time value of money

E.

Interest and number of years on any loans taken out to buy the new car

F.

No, there are no unstated factors that might affect the decision

G.

Depreciation or future resale value for each car