Pam has just moved into a new home and wants to purchase an oven. She expects to live in this house for the foreseeable future. She has narrowed her choices down to two options. Consider the following table, which describes the prices, daily electricity costs, and lifespans of the two ovens she is considering: Brand Brand U Brand V Price $2,250 $725 Avg. Cost/Day $0.16 $0.28 Lifespan 24 years 8 years Which brand will have the lower lifetime cost, and how much lower will it be? Hints: If the product's expected lifespans differ, assume that repurchase(s) at the same price is possible to equalize the lifespans. Remember that six of the twenty-four years will be leap years, and round all dollar values to the nearest cent.
Answer
A
Brand U will be $1,051.92 cheaper than Brand V.
B
Brand U will be $976.92 cheaper than Brand V.
C
Brand V will be $75 cheaper than Brand U.
D
Brand V will be $2109.40 cheaper than Brand U.
Explanation
Compare both ovens over 24 years, so Brand V must be purchased three times: 24 ÷ 8 = 3. There are 24 × 365 + 6 = 8,766 days, making electricity costs $1,402.56 for Brand U and $2,454.48 for Brand V. Including purchase prices, the totals are $3,652.56 for U and $4,629.48 for V, so Brand U is $976.92 cheaper.
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