Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Mark must buy four new tires for his car. He is considering buying tires that are $25 a piece more than his regular brand, because
Mark must buy four new tires for his car. He is considering buying tires that are $25 a piece more than his regular brand, because the higher priced tires are supposed to increase his miles per gallon by 20%. If the tires are good for 48,000 miles and Mark drives an average of 1,000 miles per month, gas costs $2.50 per gallon over the next 4 years, and Mark's car gets 30 miles to the gallon now (on the old tires), should Mark purchase the more expensive tires? (ignore discounting present value of gas savings - just calculate nominal savings) No, because Mark will only save about $60 dollars in gas over the four years but the new tires will only be $100 more. Yes, because Mark will save about $667 dollars in gas over the four years but the new tires will only be $100 more. Yes, because Mark will save about $567 dollars in gas over the four years but the new tires will only be $100 more. No, because Mark will only save about $90 dollars in gas over the four years but the new tires will only be $100 more
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started