Question

In this module you learned about costs associated with owning and operating a vehicle. There are other costs to consider as well and not all are monetary. For example, if everyone drives their own vehicle rather than using public transportation or carpooling there may be "costs" to the environment. Follow the examples in lesson 3 and the Check your understanding. Clearly show your work for each answer. Show formulas used.

A. The fuel economy of a small sedan is 7.5 L/100 km.
(i) How many litres of gasoline are required to drive 20000 km ?
(ii) If the cost of gasoline averages $1.219 per litre, find the cost of driving the small sedan 20000 km.
B. The value of cars depreciate over time. Calculate the value of a car after two years if the new purchase price of the car was $35000. The depreciation rate is 20% per year.

Answer 1

To drive 20000 km, a small sedan would require approximately 2666.67 liters of gasoline, costing around $3250.84. After two years, a car purchased for $35000 would be worth approximately $19600.

Step-by-step explanation:

(i) To find the number of liters of gasoline required to drive 20000 km, we can use the formula:

Liters of gasoline = (Kilometers driven / Fuel economy) * 100

Substituting the given values, we get:

Liters of gasoline = (20000 / 7.5) * 100 = 2666.67 liters

(ii) To find the cost of driving the small sedan 20000 km, we can multiply the number of liters of gasoline required (2666.67 liters) by the cost of gasoline ($1.219 per liter):

Cost = Liters of gasoline * Cost per liter = 2666.67 * $1.219 = $3250.84

(b) To calculate the value of a car after two years, we can use the depreciation formula:

Value after depreciation = Purchase price * (1 - Depreciation rate)^Time

Substituting the given values, we get:

Value after depreciation = $35000 * (1 - 0.2)^2 = $19600