Question

You currently drive 300 miles per week in a car that gets 15 miles per gallon of gas. You are considering buying a new fuel-efficient car for $12,000 (after trade-in on your current car) that gets 50 miles per gallon. Insurance premiums for the new and old car are $800 and $600 per year, respectively. You anticipate spending $1200 per year on repairs for the old car and having no repairs on the new car. Assume gas costs $3.50 per gallon. Over a five-year period, is it less expensive to keep your old car or buy the new car?

Answer 1

No, it is not less expensive to keep the old car as the price calculation is higher then the New Car

Purchasing new car is less expensive

Explanation:

NEW CAR EXPENSES= $21,240

OLD CAR EXPENSES= $25,800

NB: Kindly check attached picture for calculations