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Determine operating cost per mile. Choose the right answer.

Cost of car = $5,000.00
Market value after 1 year = $3,800
Cost of gas and oil = $750.00
Repairs/Maintenance = $250.00
Insurance = $300.00
Miles driven = 17,500

1 Answer

2 votes

Answer: $0.1428/mi or about 14 cents per mile

Steps:

While the cost of car = $5,000.00 is not an operating cost, the annual decrease of value is. So, given that the market value after 1 year = $3,800, the value loss is 5000-3800=$1200 for the year.

Add cost of gas and oil = $750.00, Repairs/Maintenance = $250.00, Insurance = $300.00, to get $2500 total operating cost.

The cost per mile is $2500/17500 miles = $0.1428/mi or about 14 cents per mile


User Arslan Ahmed Mir
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