Answered

At Westonci.ca, we make it easy to get the answers you need from a community of informed and experienced contributors. Our platform provides a seamless experience for finding precise answers from a network of experienced professionals. Explore comprehensive solutions to your questions from knowledgeable professionals across various fields on our platform.

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
We appreciate your time. Please come back anytime for the latest information and answers to your questions. We hope this was helpful. Please come back whenever you need more information or answers to your queries. We're dedicated to helping you find the answers you need at Westonci.ca. Don't hesitate to return for more.