You are considering selling your car and replacing it with a smaller, more fuel-efficient model. The new
Question:
You are considering selling your car and replacing it with a smaller, more fuel-efficient model. The new car will cost you \($19,000\) including all taxes. Your existing car is fairly new, you bought it only six months ago, but you underestimated its operating costs. You estimate you can sell it for \($14,700\). The existing car uses 12 litres per 100 kilometres travelled while the new one is rated at 8 litres per 100 kilometres. The cost of insuring the new car will be \($875\) instead of the current \($1,025\), and you estimate that the cost of servicing the car will be about \($225\) instead of \($350\) per year. You drive approximately 22,000 kilometres per year and you expect to keep the car for five years. The current price of gas is \($2.10\) per litre. Is it worth it for you to buy the new car? Are there any considerations other than financial ones?
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