Question

engineer at Montana Chemical Engineering Company Jennifer owns two vehicles, and one of them is entirely dedicated to business use. Her business has estimated even? car is a small, used pickup truck, the costs which she opled by the U.S. Department of Transportation. Jennifer f owning and operating her business vehicle for the first three years as given in the tahle If her interest rate is 7 helow what should be Jennifer's reimbursement rate per mile so that she can break Click the icon to view the costs of owning and operating the business vehicle. Click the icón view the interest factors for discrete compounding when 7 % per yea . The reimbursement rate should be $per mile. (Round to the nearest cent.) he c First Year Second Year Third Year Depreciation $2,879 $1,776 $1,545 Scheduled maintenance 100 153 220 Insurance 635 635 635 Registration and taxes Total ownership cost Nonscheduled repairs Replacement tires 78 57 50 $3,692 $2,621 $2,450 35 85 200 35 30 27 Accessories 15 13 12 Gasoline and taxes 688 650 522 Oil 80 100 100 Parking and tolls Total operating costs 135 125 110 $988 $1,003 $3,624 $971 $4,680 $3,421 Total of all costs 14,500 13,000 11,500 Expected miles driven

Answer 1

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1 Answer to Question 2 Calculation of Reimbursement per mile 3 Third Year Second Year Total First Year 4 3,624 $ 4,680 $ 3,421 $ 6 Total Costs 11,725 Add: Interest Expense 7 ($11,000*7%) $ 770 770$ 770 $ 2,310 5,450 14,500 4,394 $ 4,191 $ 8 Total Costs 14,035 11,500 9 Expected Miles Driven 13,000 39,000 10 Break Even Point is the point where there is no profit /loss 0.38 0.36 11 Hence, Reimbursement / mile 0.34 0.36 (Total Costs/Expected Miles 12 Driven) 13