Answered

Welcome to Westonci.ca, your ultimate destination for finding answers to a wide range of questions from experts. Explore a wealth of knowledge from professionals across various disciplines on our comprehensive Q&A platform. Connect with a community of professionals ready to help you find accurate solutions to your questions quickly and efficiently.

Paul Scott has a 2014 Cadillac that he wants to update with a satellite-based emergency response system so that he will have access to roadside assistance should he need it. Adding this feature to his car requires a flat fee of $500, and the service provider requires monthly charges of $20. In his line of work as a traveling salesperson, he estimates that this device can save him time and money, about $35 per month. He plans to keep the car for another 3 years.

Required:
a. Calculate the breakeven point for the device in months.
b. Based on a, should Paul have the GPS system installed in his car?

Sagot :

Talanat
Answer to part A:

Cost incurred = $500

Monthly Charges = $20

Savings per month = $35

Net Savings = $35 - $20 = $15

Breakeven point for the device in months

= Point where there is no profit or loss

= Number of months required to get the investment back

= Investment / Net Savings per month

= $500 / $15

= 33.33 months

Answer to Part B:

As the investor wants to keep the GPS system for 3 years,

Profit = (36 months - 33.33 months) * net savings

= 2.67 * $15

= $ 40

As the investor is able to earn profits from GPS system, he should install it in his car.
You can ask the questions at kahoo, com and if they are still in there please send them a message o
Thank you for trusting us with your questions. We're here to help you find accurate answers quickly and efficiently. Thank you for your visit. We're committed to providing you with the best information available. Return anytime for more. Thank you for visiting Westonci.ca, your go-to source for reliable answers. Come back soon for more expert insights.