Question
A traveling salesman travels from city to city for business. Every other year he buys a used car for about $17,000. The dealer allows about
A traveling salesman travels from city to city for business. Every other year he buys a used car for about $17,000. The dealer allows about $8,000 as a trade in allowance, so the salesman spends about $9,000 every other year for a car. He keeps accurate records of his expenses, which total $0.323 per mile. His employer has two plans to reimburse car expenses:
Actual expenses: The salesman will receive all his operating expenses, and $4,500 each year for the cars decline in value.
Standard mileage rate: The salesman will receive $0.565 per mile but no operating expenses and no depreciation allowance.
At what annual mileage do the two methods give the same reimbursement?
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