Question

Robert is looking to buy a deep fryer. He has narrowed his search down to two models. The following table gives the details of the prices, cost per use in electricity and oil, and lifespan of the two models Robert is considering to purchase. Brand Brand P Brand Q Price $144.00 $37.50 Avg. Cost/Use $0.49 $0.75 Lifespan 6 years 2 years Robert plans on using his deep fryer about eight times per month. After six years, which brand will have the lower lifetime cost, and by how much? Hint: Assume that either deep fryer can be repurchased at the same price, if needed to provide the desired length of service. a. Brand P will be $118.26 cheaper than Brand Q. b. Brand P will be $149.76 cheaper than Brand Q. c. Brand Q will be $184.50 cheaper than Brand P. d. Brand Q will be $31.50 cheaper than Brand P.

Answer 1

the correct answer is A. Brand P will be $118.26 cheaper than Brand Q.

Answer 2

The total cost for the entire life span of the deep fryer  is computed below:
Brand P total cost =Purchase price + total electricity cost 
                                = $144+($0.49x8x12x6)
                                =$426.24
Brand Q total cost =(Purchase price x 3)+ total electricity cost
                                =( $37.5x3)+($0.75x 8x12x6)
                                =   $544.5
Difference = Brand Q-Brand P
                   =$544.5-$426.24
                   =$118.26
Robert will have to choose Brand P because it will be cheaper by $118.26 than Brand Q in their entire lifetime.