Which might be cheaper in the short term

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Reference no: EM133901909

Problem

Natalie is thinking about buying a van for her business, but she isn't sure if it's a good idea. The van costs $36,500; she wants to spend $2,500 to paint it and another $1,500 to remove the back seat and install shelves. She also has to pay $2,400 per year for insurance, which adds up to $12,000 over five years. After factoring in all these costs, she would spend $52,500, but she expects to sell the van for $7,500 at the end of five years. That means the net cost of owning the van would be around $45,000. One way to think about this is by breaking it down into a cost per mile. Since she expects to drive 200,000 miles, each mile would cost her about 22.5 cents (not counting gas and maintenance). Before making a decision, Natalie should compare this cost to other options. Get the instant assignment help. For example, she could lease a van, which might be cheaper in the short term, or she could use a personal vehicle and track the miles for tax deductions.

Reference no: EM133901909

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