If the interest rate is 10 and the employees travels are, Ask an Expert

Economics

A company is currently paying an employee $0.25 per kilometer to drive a personal car for company business.

The company is considering supplying the employee with a car, which would involve the following:
purchase of the car for $15,000 with an estimated 3-year life, a net salvage value of $5000, taxes and insurance costing $500 per year, and operating and maintenance expenses of $0.10 per kilometer.

If the interest rate is 10% and the employee's travels are anticipated to be 12,000 kilometers annually, what is the equivalent cost per kilometer (without considering any income tax)?

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M962270

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