9. John travels from city to city to conduct his business. Every other year he buys a used car for about $12,000. The car dealer allows about $8,000 as a trade-in allowance with the result that the salesman spends $4,000 every other year for a car. John keeps accurate records, which show that all other expenses on his car amount to $0.14 per kilometre for each kilometre he drives. John's employer has two plans by which salesmen are reimbursed for their car expenses: a) John will receive all his operating expenses, and in addition will receive $2,000 each year for the decline in value of the car. b) John will receive $0.20 per kilometre but no operating expenses and no depreciating allowance. If John travels 29,000 kilometres per year, which method of computation gives him the larger reimbursement? At what annual distance do the two methods give the same reimbursement? |