Robert is looking to buy a deep fryer. He has narrowed his search down to two models. The following table gives the details of t
he 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.
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.
