if his practice expands and he has to travel 19 000 km per annum what should be his 620935
A practising chartered accountant now spends Re 0.90 per km on taxi fares for his client’s work. He is considering two alternatives, the purchase of new small car or an old big car. The estimated cost figures are as follows:
|
New Small Car Rs. |
Old Big Car Rs. |
|
|
Purchase price |
35,000 |
20,000 |
|
Sale value after 5 years |
19,000 |
12,000 |
|
Repairs and servicing p.a. |
1,000 |
1,200 |
|
Taxes and insurance |
1,700 |
700 |
|
Premium |
||
|
Petrol consumption per |
10 km |
7 km |
|
litre |
||
|
Petrol per litre |
3.50 |
3.50 |
His estimated travelling p.a. is 10,000 km at present. Which of these three alternatives will be cheaper? If his practice expands and he has to travel 19,000 km per annum, what should be his decision? At how many kilometres per annum will the cost of the two cars break-even?